Mr.ORE THAT 100 million Americans will be tuning in on February 11 for the Super Bowl, the biggest event on the country's sports calendar and its television programs. In 2023, the audience for the football game (the American type) was more than double that of the most-watched broadcast that year. Although many TV viewing has migrated to streaming platforms, when Americans want to watch sports, the old-fashioned “linear” TV that's where they go.
Is this about to change? On February 6, three of America's biggest sports programmers—Disney (home of ESPN sports network), Fox and Warner Bros Discovery (WBD)—unveiled a plan to move its most valuable content to a new platform. The as-yet-unnamed streamer will launch this fall, showing everything from American football to Wimbledon tennis. If successful, it could be a game-changer for the media industry.
Most other types of TV have already gone online. Last year, streaming accounted for more viewing minutes in the United States than broadcast or cable. TV, according to Nielsen, a ratings company. Sports is the exception. Even as big tech has added sports to its menu – Amazon and YouTube have bought the rights to American football, Apple has tried its hand at soccer and Netflix is about to take on wrestling – true sports fans still have to pay for the cable. The audiences are vast: 44 of the 50 most-watched shows in the United States last year were devoted to sports (see table).
The new service would be the largest sports bet made on streaming. The total value of sports rights on the platform – golf, NASCAR, hockey and more – will cost about $16 billion a year, estimates Bernstein, a broker. In total, the content list will encompass around 55% of US sports rights by value, according to Citigroup bank.
Some wonder if the new contender will ever make it to the starting line. Antitrust regulators could object to three sports content giants joining forces. And joint ventures can be cumbersome. Many are already comparing the new streamer to Hulu, one of the first platforms launched in 2007 by Fox and BNC to counter the threat posed by YouTube. Its shared ownership slows it down, hampers investments and earns it the nickname “ClownCo”. The new sports venture risks being “ClownCo 2.0,” says Brian Wieser of Madison and Wall, an advertising consultancy.
Success may depend on price. LightShed Partners, a research firm, predicts that a subscription will start at $35 per month (plus a generous dose of advertising), less than half the cost of a full sports package on cable. Sports enthusiasts may consider the offer insufficient. But casual fans might be tempted to finally abandon cable, accelerating the decline of cable and satellite companies, which have already lost half their U.S. subscribers over the past decade.
What does this bring to Disney, WBD and Fox? At first, they may lose out as the lucrative cable market shrinks. But the target market is homes that have never had access to cable, Fox boss Lachlan Murdoch told investors on February 7. And by offering viewers a streaming package that includes sports, they could reduce customer churn. People can easily cancel their Disney+ subscription after consuming the latest “Star Wars” spin-off (about 5% do so each month). But they can't binge on a football season. And when this is over, it will be time for basketball, then baseball, etc.
Joining forces could also improve the trio's bargaining power compared to sports leagues. Competition for sports rights is intense with the arrival of new bidders such as large technology companies. If Disney, WBD and Fox made a joint offer, they could curb the price inflation that the leagues are now demanding. For companies excluded from the initiative, a successful launch would represent their “worst nightmare,” says LightShed Partners. Companies like Paramount and BNCUniversal may have a harder time attracting viewers to its own sports streaming initiatives, even as the decline of the cable market, where they still make most of their money, accelerates. It's time for a new game plan. ■
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