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Disney’s ESPN, Fox and Warner Bros Discovery plan to launch a sports streaming service later this year that will aggregate the games offered by the media groups’ traditional television networks.
The service, to be offered in an as-yet unnamed app or bundled with Disney+, Hulu and Max streaming subscriptions, will be aimed at US consumers who have ditched traditional pay-TV packages in favour of streaming.
“For each of [the networks’ sports divisions] the pay-TV bundle was a vital part of our business,” said one person involved in the new business. “Currently there’s not a great product out there for those outside the pay-TV bundle — that’s what this platform is targeted toward.”
The companies have been discussing the venture for about six months, but have not settled on its brand name, management team or pricing. Each company will own one-third of the joint venture, have equal board representation and license their sports programming on a non-exclusive basis.
Live sports broadcasts remain the primary draw for the companies’ linear TV businesses, which have been in decline for years because of cord-cutting. But the cost of sports rights has been rising as tech companies such as Apple and Amazon have started to bid for some games for their streaming services.
Jamie Lumley, an analyst at Third Bridge, said: “Combining forces for these companies will allow them to reach a large audience while sharing the burden of increasingly expensive sports rights.”
The service will aggregate about $16bn worth of sports rights, according estimates by Bernstein Research, and will have no impact on the individual companies’ plans to strike new deals with leagues. “This platform is not in the business of acquiring sports rights,” said the person involved in the new business.
Bob Iger, Disney chief executive, said the launch would be “a significant moment for Disney and ESPN, a major win for sports fans, and an important step forward for the media business”.
The joint venture comes as sports leagues charge higher fees for rights to broadcast fixtures, which are increasingly split between multiple media distributors. The US National Football League, whose 11-year, $110bn-plus rights package is the costliest in sport, is shared between four linear and cable networks and Amazon.
The NBA, which is in discussions with networks about its next round of broadcast rights, has indicated it hopes to spread its games across linear, cable and streaming platforms.
The league’s current arrangement with Disney’s ESPN and Warner’s TNT allows for some games to be aired on ABC, Disney’s free-to-air broadcast network, and last autumn Warner began experimenting with simulcasting some sporting events on its Max streaming platform.
Media companies and cable distributors have clashed over what content should be made available to cable customers and streaming platforms. Last summer, ESPN was briefly blacked out for some US customers of Charter Communications’ Spectrum cable service over such a dispute between Disney and the distributor, limiting access to US Open tennis matches and the opening week of the NFL season.
Lachlan Murdoch, Fox chief executive, on Tuesday said the new service would “provide passionate fans outside of the traditional bundle an array of amazing sports content all in one place”.
David Zaslav, CEO of Warner Bros Discovery, said the venture “exemplifies our ability as an industry to drive innovation and provide consumers with more choice, enjoyment and value”.
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