So Is This REALLY A “Game Changer?” For The A Teams? Or Just The JV Playing Games?

On yet another dreary rainy afternoon, my phone began to go nuts just after lunch.  Friends I do have were eager to share with me the news that shook up their day, as well as just about everyone who covers or is merely a fan of sports media.  These things tend to happen when the press goes all in with click-baitable hyperbole:

As VARIETY’s Brian Steinberg described it:

It’s a game-changer.

Fox Corp., Warner Bros. Discovery and Disney are set to launch a new streaming joint venture that will make all of their sports programming available under a single broadband roof, a move that will put content from ESPN, TNT and Fox Sports on a new standalone app and, in the process, likely shake up the world of TV sports. 

The three media giants are slated to launch the new service in the fall. Subscribers would get access to linear sports networks including ESPN, ESPN2, ESPNU, SEC Network, ACC Network, ESPNews, ABC, Fox, FS1, FS2, BTN, TNT, TBS, truTV and ESPN+, as well as hundreds of hours from the NFL, NBA, MLB and NHL and many top college divisions. Pricing will be announced at a later date, but the companies will likely set a monthly subscription that is more than a consumer would pay for a standalone regional sports network, which costs $20 to $30 per month, and less than a larger digital programming package such as Hulu + Live TV or YouTube TV, which cost around $75 to $80 per month, according to a person familiar with current discussions.

The new joint venture, currently unnamed, is seen as a way for Disney, Fox and Warner Bros. Discovery to gain back some of the lucrative affiliate fees they have lost as their cable subscribers have cut the cord and moved to streaming outlets as their primary source of video entertainment. The new venture would pay its three corporate parents for licensing rights, essentially creating a new distribution partner.

It certainly gave some familiar old faces a chance to crow and brag via press release.  Steinberg happily shared a couple from our old favorites:

“The launch of this new streaming sports service is a significant moment for Disney and ESPN, a major win for sports fans, and an important step forward for the media business,” Disney CEO Bob Iger said in a statement. “This means the full suite of ESPN channels will be available to consumers alongside the sports programming of other industry leaders as part of a differentiated sports-centric service”.  “This new sports service exemplifies our ability as an industry to drive innovation and provide consumers with more choice, enjoyment and value and we’re thrilled to deliver it to sports fans,” David Zaslav, Warner Bros. Discovery’s CEO, said in a statement.

And indeed, we now have a third media CEO we can task DALL-E to create an avatar for.  Yosemite Zas and Bob AIger, meet Foxy Lachsie.  And he added his thoughts for the record:

We believe the service will provide passionate fans outside of the traditional bundle an array of amazing sports content all in one place,” said Fox’s Lachlan Murdoch in a statement.

Which is kinda a reversal of ‘tude, considering what Steinberg reminded his readers of what had been said only recently by our foxy friend:

The new business also represents a significant move for Fox, which has resisted calls to put its sports content on streaming venues. Indeed, Fox Corp. CEO Lachlan Murdoch tried to tamp down speculation in November that it might decide to put its sports content on its Tubi free, ad-supported streaming hub. “We don’t envisage having significant live sports on Tubi,” Murdoch said.

And as an owner of more than a dozen top-tier broadcast stations, not to mention a profitable news network with a lot of common audience among its older viewers, Foxy Lachsie is motivated to keep as many of those Luddites in his camp.  But as someone ostensibly in his target demo who has been watching less of his sports content, particularly college football and basketball on his cable networks, I’m quite happy they’re joining the big boys at what appears to be the varsity dance.

But that’s just my opinion.  A LOT more qualified observers have theirs.  FRONT OFFICE SPORTS compiled a few of the observations from some of Steinberg’s competitors last night in their newsletter that both answer and call into question a number of the concerns that yesterday’s hyperbole triggered:

Deadline’s Dade Hayes: “The notion of a JV is a particularly interesting development for Disney, given its recent buyout of Comcast’s financial stake in Hulu and also its development of a stand-alone version of ESPN that will be more robust than ESPN+.”

CNBC’s Alex Sherman: “One thing I’m told — highly unlikely NBCU would have played ball here. They’d have been very reluctant to unbundle their entertainment networks.”

The Athletic’s Chris Vannini: “If they’re airing stuff together, does this mean they won’t compete with each other for sports rights and could bid together for sports against Amazon/Netflix/Apple? … Feels like this is the Last Stand for cable channels to band together and stay in the game for the next time all the big rights come up.”

Parrot Analytics’ Julia Alexander: “Feels increasingly likely that ESPN+ will shut down, with those customers being integrated into ESPN OTT + this one at discount. … I am also finding it very difficult to understand why Bleacher Report on Max needs to exist if all these sports + then some are available elsewhere. … My quick thought (will likely change as I have time to reflect more based on information) is that Fox is the best positioned within this situation. Doesn’t necessarily own an SVOD, isn’t backing away from linear, spreads out ads + works on tech innovation. Shares costs of rights.”

And, of course, our wise visitor from the Great White North Rick Ellis, who mused quite a bit in soggy Pasadena last night via his TOO MUCH TV newsletter:

  • While no price has been released, because this service is essentially a limited vMVPD, it is not going to be able to offer a regular price that is a discount from what other rival vMVPD’s can offer. It will be somewhat cheaper than rivals such as YouTube TV because it won’t include networks from Paramount and NBCUniversal, Hallmark, A&E Networks and AMC. But given that it will include more sports programming than the typical vMVPD, it’s hard to see how it can have a non-discounted price of less than $40 per month.
  • What does this mean for the future of ESPN+ as a stand-alone app? And does this make a proposed standalone ESPN app less viable? Reporting today from CNBC includes this paragraph: The launch of the product will not stop ESPN from offering a full direct-to-consumer streaming product, which Disney is still researching and remains on schedule to debut by 2025, according to a person familiar with the matter. ESPN has previously said it plans on releasing that product this year or next year.

And Ellis has particular reason to be skeptical, based on some of the digging he did:

I was told by several people that neither Paramount Global or NBC Universal were approached to be part of the proposed sports mini-bundle. Sources said the sports rights controlled by Paramount were seen as a more “problematic” negotiation in order to be included in the service. And NBC Universal has long said it will only license its channels and sports rights on an all-or-nothing basis.

And as a sports fan, my own skepticism grows as well, particularly when one looks at the parochial motivations behind these entities’ reluctance.  NBCU, owned by Comcast, is, of course, motivated to keep as much of their content available via a core business like cable.  The euphamism of “problematic” is likely a code for the unstable nature of Paramount Global itself, with a looming potential of being sold for parts and significant questions on who actually would get stuck with something like this.  But these companies DO have the rights to significant parts of the NFL and top college conference packages.  And I don’t know a single football fan who would settle for anything other than the complete buffet of options.  That fact alone makes this announcement seem incomplete, at best in progress and, at worst, a Trojan horse perhaps released by a faction, not an industry, seeking to do existential battle with the likes of Amazon, Apple, YouTube and Netflix.  And if they’re joining rings as the Power Strangers, they need as much unity and force as possible to deal with that level of competitor.  Ask some members of Congress what it’s like to try and win a battle without all of their ducks in a row.  Assuming you can even talk to them.

But to me the most significant observation came when I actually got a flurry of urgent calls from a valued former colleague, whose resume includes top positions running sports for two of the players in this drama–HBO and FOX–and also ran a joint venture between CBS and FOX back in the home video days.  And while he was eager to find out what I thought, I was more than eager to get his take. Pay attention:

“I’ve run JVs, and not all partners are created equal.  I’ve read where Iger believes he should get the lion’s share of revenue because he’s contributing more networks and content, which is probably why he’s taking lead on this.  There will be more time spent arguing about that before any of the more crucial consumer points get released.”

As someone who sat on some of the early conference calls with the first iterations of Hulu, where more time was spent between partners jockeying for microphone time to brag about how the name actually had more resonance than Haagen-Dazs, and could overhear the audible snarking of invited advertisers captured by hot mics while they jockeyed for omelettes and scones, I’m very aware of the strong likelihood of similar growing pains occurring at the outset here.

And both myself and my impressively auspiced friend both heeded the wise words of our former colleague David Hill, who explained fandom from the perspective of an ex-Pat:  “Sports is tribal”.  Passionate fans care about THEIR team first and foremost and the other games second.  Local sports ratings, even today, tell that story conclusively.  Amazon is currying favor with the leagues themselves and propping up what’s left of the RSN business this year in anticipation of clawback rights from 2025 on.  That’s the real villain the Power Strangers are fighting.   And it’s gonna take more than just a partial alliance to be able to do battle effectively with it.

And in discussing that reality check, we both took note of the exceptional value that brands now put on short-form content, with much being documented of late of how much impact and value is derived from snippets, with the ability to measure it by companies not named Nielsen growing by the day.  There is likely opportunity for such a JV to offer such touchpoints, assuming they can all play nicely together.  From my friend’s vantage point, that’s hardly a given.

So calling this a game-changer, at least now, is likely premature.  There’s an awful lot of work to do before these players even take the field.  And if you’ve ever played on or might be a parent on someone on the JV, you know how difficult that is to make happen.

Play nice, kids.

Until next time…

 

 

 

 

1 thought on “So Is This REALLY A “Game Changer?” For The A Teams? Or Just The JV Playing Games?”

  1. There is no way these 3 exec teams will be able to agree on anything. If Iger is already looking for the most $, this relationship cannot last.

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