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Disney's ESPN, Fox and Warner Bros. Discovery plan to launch a sports streaming service later this year that will bundle games offered by the media companies' traditional television networks.
The service, which will be offered in an as-yet-unnamed app or bundled with Disney+, Hulu and Max streaming subscriptions, is aimed at U.S. consumers who have ditched traditional pay-TV packages in favor of streaming.
“For each of [the networks’ sports divisions] “The pay-TV package was an important part of our business,” said a person involved in the new deal. “There is currently no great product for those outside of the pay TV package – that’s what this platform is aimed at.”
The companies have been discussing the venture for about six months but have not yet agreed on the brand name, management team or pricing. Each company will own a third of the joint venture, have equal representation on the board and license its sports programs on a non-exclusive basis.
Live sports broadcasts remain the main draw for the companies' linear TV business, which has been declining for years due to cord cuts. But the cost of sports rights has risen as tech companies like Apple and Amazon have started bidding for some games for their streaming services.
The platform will have no impact on individual companies' plans to acquire sports rights. “This platform is not for the acquisition of sports rights,” said the person involved in the new deal.
Disney CEO Bob Iger said the launch was “a significant moment for Disney and ESPN, a big win for sports fans and an important step forward for the media business.”
The joint venture comes at a time when sports leagues are demanding increasingly higher fees for game broadcast rights, which are increasingly being split between multiple media distribution partners. The US National Football League, whose 11-year rights package is the most expensive in sports at over $110 billion, is already shared by four linear and cable networks as well as Amazon.
The NBA, which is negotiating with broadcasters over its next round of broadcast rights, has indicated it hopes to distribute its games across linear, cable and streaming platforms.
The league's current agreement with Disney's ESPN and Warner's TNT allows some games to be broadcast on ABC, Disney's free-to-air network, and last fall Warner began simulcasting some sporting events on its Max streaming platform.
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Media companies and cable providers clashed over what content should be made available to cable customers and over-the-top streaming platforms. Last summer, ESPN was briefly blocked for some U.S. customers of Charter Communications' Spectrum cable service because of a dispute between Disney and the distribution partner, limiting access to U.S. Open tennis games and the opening week of the NFL season.
Fox chief executive Lachlan Murdoch said on Tuesday that the new service would “give passionate fans a range of fantastic sports content in one place, outside of the traditional package”.
David Zaslav, CEO of Warner Bros. Discovery, said the venture is “an example of our ability as an industry to drive innovation and bring more choice, enjoyment and value to consumers.”
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