ESPN/FOX/WBD Mega Streaming Skinny Bundle to Shape TV’s Future
In what may well prove to be the biggest Big Three matchup since LeBron James and Chris Bosh joined Dwyane Wade down in Miami, a triumvirate of sports-media giants—ESPN, Fox and Warner Bros. Discovery—are teaming up to launch a new streaming service.
Other than the identity of the principals, each of which will own one-third of the digital platform, there is almost nothing that has been disclosed about the joint venture. As yet, the three parties have yet to offer further details as to how much subscribers can expect to pay to access the new streaming service, or under what name it will be marketed.
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The direct-to-consumer offering is expected to drop sometime this fall, presumably before the start of football season. From what little intel that was made available Tuesday, the collaboration effectively will function as a streaming “skinny bundle,” giving sports fans who don’t subscribe to a legacy pay-TV package access to the ESPN family of networks and Disney’s broadcast flagship, ABC, as well as Fox and its twin cable siblings (FS1 and FS2) and the core trio of WBD nets (TBS, TNT, truTV).
Also included in the digibundle are three cable channels that are aligned with three of the top college sports conferences: Big Ten Network, SEC Network and ACC Network). As part of today’s announcement, the partners said subscribers to the service also will be made accessible to subscribers of such existing streaming offerings as ESPN+, Hulu and Max.
The service will be overseen by an independent management team. More information about the collaboration will be made available Wednesday during Fox’s early-morning earnings call, with Disney expected to add to our collective store of knowledge during their own after-hours conference on Wednesday afternoon.
Given the demonstrable manner in which the cable bundle has managed to retain the custom of the most sports-hungry consumers, the new venture isn’t expected to cannibalize the already much-diminished pay-TV model. In the last five years, some 35 million U.S. TV households, or around 40% of all bundled subs, have cut the cord, although the majority of these defectors appear to be light or infrequent sports viewers. Despite an 18% drop-off in overall TV usage since 2022, sports ratings have increased during the same period, which if nothing else, would seem to indicate that sports is probably the only thing that’s keeping the bundle together.
Moreover, the ongoing erosion of primetime broadcast deliveries suggests that most Americans are quitting pay-TV in order to binge on the entertainment-heavy fare at on Netflix, Disney+ and other streaming services. Per Nielsen, the average network TV show is drawing just 3.06 million viewers per episode, of whom a meager 497,841 are members of the adults 18-49 demo. By comparison, the NFL’s national window on Sunday afternoons averaged 25.3 million viewers this season on CBS/Fox, of whom one-third (8.29 million) were adults under 50. In terms of the consumers who are most sought-after by NFL advertisers, the big Sunday window outdraws broadcast prime by a 16.7 multiple.
“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 press release. “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.”
Among the pro sports leagues that will be available via the new service are the NFL, NBA, MLB and NHL. At the university level, fans will be able to stream the College Football Playoff, the NCAA men’s and women’s basketball tournaments, plus a host of regular-season competition across the SEC, ACC, Big Ten, Big 12 and Big East.
In the same release, Fox CEO Lachlan Murdoch said his team was “pumped to bring the Fox Sports portfolio to this new and exciting platform.” Murdoch is expected to offer investors some further insights into the proposal during tomorrow morning’s earnings presentation.
The three parties have yet to officially sign off on the partnership, although an agreement-in-principle has been reached. In keeping with the dual-revenue-stream model that made cable such a powerhouse in the 1980s and 1990s, the subscription service will be ad-supported.
Sitting out the cooperative effort are NBC and CBS, both of which offer a wide selection of televised sports content by way of their respective streaming services (Peacock and Paramount+.) NBC is owned by the cable giant Comcast, and as such is particularly wary of participating in a venture that might accelerate the decline of the legacy bundle.
Per its latest earnings report, Comcast lost 389,000 video subs in the final quarter of 2023, closing out the year with 14.1 million bundled subs. That’s down from 16.1 million in the fourth quarter of 2022. At year-end in 2019, Comcast had 21.3 domestic video customers.
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