Why ESPN, Fox and Warner Bros. Discovery Teamed Up for New Sports Streaming Service

It will be available for Max, Hulu and ESPN+ subscribers

The sports bundle is back.

In a stunning move, Disney, Fox and Warner Bros. Discovery have teamed up to launch a new joint streaming TV service that combines sports rights.

The joint venture brings together portfolios of sports from linear networks like ESPN’s suite of linear properties, ABC and ESPN+; Fox and its properties FS1 and FS2; and WBD’s cablers such as TBS, TNT and truTV, as well as certain direct-to-consumer offerings.

Why the historic team-up is happening

With media rights to major sports leagues becoming more and more expensive, companies see the benefit in investing in streaming rights, especially as live sports drive both higher premiums and higher engagement.

“Live sports are great for attracting a large audience and for engaging that audience with both the competition, but also the ad breaks,” Kevin Krim, CEO of TV advertising data firm EDO, told ADWEEK. “The broadcasters are using this engagement data and showing how high the engagement can be to set premium prices that are well above everything else you can charge, on both traditional TV and streaming. That’s the economic engine that drives both the whole TV ecosystem, but it’s also what’s driving up the cost of these rights deals with the leagues.”

Set to launch in the fall of 2024 ahead of the NFL season, the new service will be available as a DTC product as a new app. It will also be made accessible to subscribers of Max, Hulu and ESPN+. Pricing will be announced at a later date.

A game plan for rising costs

The NBA rights deal expires at the end of the 2025 season, becoming the next major league to negotiate a new rights agreement. And with streamers like Apple, Netflix and Amazon swirling, media companies see the benefit of joining forces against tech giants.

“If you’re in the shoes of Disney, Warner Bros. Discovery, Fox, and you’re looking at a competitive environment where you’re going to be bidding for one of the crown jewels of television—the NBA—you’re gonna be bidding against Amazon, Apple, Google and Netflix,” said Krim. “You realize you need to team up, and I think that’s what this is pretty clearly a response to.”

Krim also noted that streaming services have seen major success with live sports, with Thursday Night Football on Prime Video seeing a 70% increase in brand engagement on ads, higher than rates on cable, broadcast and the NFL overall. NBCUniversal and Peacock also had “a really good experience” with the exclusive NFL playoff game on Peacock, according to Krim.

Disney CEO Bob Iger described the upcoming streaming service as a “major win for sports fans,” adding it is an important step forward in the media business.

“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,” Iger said in a statement. “I’m grateful to Jimmy Pitaro and the team at ESPN, who are at the forefront of innovating on behalf of consumers to create new offerings with more choice and greater value.”

Each of the companies, Fox, ESPN and WBD, will own one-third of the service, have equal board representation and license sports content to the joint venture on a non-exclusive basis. The service will also have its own independent management team.

“We’re pumped to bring the Fox Sports portfolio to this new and exciting platform,” Fox CEO and executive chair Lachlan Murdoch said in a statement. “We believe the service will provide passionate fans outside of the traditional bundle an array of amazing sports content all in one place.”

It’s also the first time Fox’s live sports will be available on a streaming service owned by the company, without requiring a cable login.

The service is designed to appeal to sports fans who have abandoned cable and includes rights to major leagues like the NFL, NBA, WNBA, MLB, NHL, UFC, Formula 1, NASCAR, three of the four grand slam tennis events, the PGA Tour, the FIFA World Cup, NWSL and MLS—and major college events across conferences, including the NCAA Men’s and Women’s basketball tournaments and the College Football Playoff.

“At WBD, our ambition is always to connect our leading content and brands with as many viewers as possible, and this exciting joint venture and the unparalleled combination of marquee sports rights and access to the greatest sporting events in the world allows us to do just that,” David Zaslav, CEO of WBD, said in a statement. “This new sports service exemplifies our ability as an industry to drive innovation and provide consumers with more choice, enjoyment and value and we’re thrilled to deliver it to sports fans.”

More announcements to come?

Paramount and NBCUniversal are notably absent from the new streaming service, which Krim thinks will have major ramifications moving forward.

“I would not be surprised to see them join later,” said Krim. “I’m a bit surprised that they’re not in it in this initial announcement.”

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