Written by Richard Deitsch, Mike Vorkunov, Andrew Marchand, and Greg Rosenstein
They announced Tuesday that ESPN, FOX and Warner Bros. Discovery is forming a new joint venture to launch a sports streaming service in the fall of 2024. This will include the companies' portfolios of sports networks, some direct-to-consumer sports services and sports rights.
Subscribers will have access to linear sports networks including ESPN, ESPN2, ESPNU, SEC Network, ACC Network, ESPNEWS, ABC, FOX, FS1, FS2, BTN, TNT, TBS, truTV and ESPN+. It can also be included with Disney+, Hulu, and/or Max.
“The launch of this new sports streaming service is an important moment for Disney and ESPN, a huge win for sports fans and an important step forward for media,” Bob Iger, CEO of The Walt Disney Company, said in a statement. . “This means that the full lineup of ESPN channels will be available to consumers alongside the sports programming of other industry leaders as part of a premium, sports-focused service. I am grateful to Jimmy Pitaro and the ESPN team, who are at the forefront of innovation on behalf of consumers to create new offerings with more choice and greater value.” .
Warner Bros. CEO David Zaslav added: Discovery: “At WBD, our ambition has always been to connect our leading content and brands to as many viewers as possible, and this exciting joint venture and unparalleled combination of iconic sports rights and access to the world's greatest sporting events allows us to do just that. This new sports service exemplifies our ability as an industry to drive innovation and provide consumers with more choice, enjoyment and value, and we are thrilled to bring it to sports fans.”
The statement added that prices will be announced at a later time.
What will it mean for consumers?
This is the bigger question at hand and we will learn more about it as more details emerge. One of the biggest questions for me is what is the price point for such a product? In theory, and in practice, giving sports fans the opportunity to purchase these important sports properties outright without having to pay for an entertainment item is a potential game-changer.
On the subject of the price point for the joint sports streaming service, which will be foremost in consumers' minds, the joint venture has not yet finished its research on where to take it. But for some guidance, based on those briefed on the deal, it will likely be priced between where an independent RSN might charge for its monthly offering (think $20-30 a month depending on where you live) or what you might pay vs. bundled package services (think $75 and up). Could that mean around $50-55? We will learn soon.—Richard Deitch, media reporter
What is this new project called?
There's no official name for the joint venture yet – they're coining names in the lab – but this will be very important when it comes to market. Feel free to send us your suggestions – you might get a research fee. — Ditch
What will that mean for ESPN, FOX and Warner Bros.? Discovery?
While the deal between ESPN and Warner Bros. Discovery and Fox Sports are important, but they're not the complete solution for sports fans, at least not yet. After a year of discussions between the three entities, it will give fans another option to purchase sports games. Without CBS, NBC and Amazon, among others, this would not be the be-all and end-all for an all-encompassing sports viewing buffet.
On the business side, the deal represents a one-third split in ownership between ESPN, WBD Sports and Fox, however the fees each company will receive depend on what it earns in its cable deals and with services, such as YouTube TV, according to sources familiar with the agreement. This means that ESPN, which receives the highest fees, will receive a higher percentage of each subscriber in the new venture.
It's also just a precursor to ESPN's direct-to-consumer offerings. It still plans to take its parent ship, ESPN, direct-to-consumer on its own by next year, according to sources familiar with the agreement. ESPN will still be available on cable. In their latest forecast, ESPN+ will be priced in the $25-30 per month range. The new ESPN, WBD and Fox entity doesn't have a price point yet.
ESPN is also continuing discussions with the NFL, other leagues and top digital players, regarding potential partnerships, according to sources familiar with the agreement.
For Fox, this is its first move into a paid sports subscription service, which it slowed down when its competitors began entering the space. It's a small step that has no downside for the company. WBD Sports will continue its plans with MAX, where it already offers all of its sports content.
While the company will have its own management team, including a CEO, it will not be competing together for the rights as a single entity, at least for now. In the end, this is basically like a Hulu-like sports project. It could be a solution for some cord cutters, but it's not the end-all-be-all, yet. — Andrew Marchand is a senior sports media columnist
This announcement comes at an interesting time
Releasing this just months before the NBA puts its next media rights deal on the market is certainly interesting timing for the league. Two potential bidders for parts of their rights package just agreed to a joint venture to broadcast those games starting next fall. WBD and Disney will remain exclusive to linear channels, so it's not as if this is a single channel accommodating their games. But now there's one place to shop for consumers to watch NBA games and they're sharing the revenue and costs for it.
What impact does this have on the rights fees the NBA receives? I think the NBA might be happy in a way because they want their games to be more accessible and less segmented, and this new DTC app will at least allow fans to find a decent number of nationally televised games in one place. — Mike Vorkunov, national basketball business reporter
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(Photo: Erica Denhoff/Ikon Sportswire via Getty Images)
