Fox has a new playbook for the sports streaming space, and everyone has questions.
On Tuesday, Fox, ESPN and Warner Bros. Discovery surprisingly announced they’d come together to release a new combined sports streamer in the fall of 2024. The product will combine 14 linear networks, including Fox and its portfolio of affiliates, ESPN and its products and WBD’s cablers, and could completely change the sports streaming space and rights moving forward.
Now, Lachlan Murdoch, Fox CEO and chief executive chair, is explaining why.
“The inclusion of our networks in the platform is consistent with our strategy, being proudly consumer-first and distribution agnostic across the distribution ecosystem,” Murdoch said during an earnings call on Wednesday.
Though the Fox CEO reiterated that traditional pay TV will remain the company’s dominant customer base, he added, “This unique new platform opens up a new market for us, one that we have not accessed before and that we’re excited to participate in.”
In the Wednesday earnings call, analysts peppered Murdoch with questions about the big sports streaming TV news, and the CEO explained several behind-the-scenes details about the new game plan.
Like other broadcasters, Fox enjoyed robust growth from its live sports ratings in 2023-2024, with NFL games averaging 19 million viewers on Fox this season and America’s Game of the Week averaging 25 million, an 8-year high. However, it’s largely remained out of the sports streaming space.
Murdoch explained that Fox had been monitoring the space for years, and—as it was reviewing the space and developing the concept with partners over several months—it became clear that now was the time to launch to reach new consumers.
“It’s a new market where there’s no product serving the sports fans that are not within the cable TV bundle,” Murdoch said. “So it accesses a whole new market and drives a tremendous amount of new reach.”
When it comes to the sports streaming space, Murdoch explained the “opportunity is huge” because the streamer will focus on “cord nevers” as opposed to “cord cutters.”
“You look at the American market, roughly say 125 million households in America, and roughly half of those are not within the traditional bundled cable ecosystem,” Murdoch said. “The target for this product—which is going to be, I think, incredibly innovative when you see it rollout—is really that that universe of, call it, 60 million-odd households that currently don’t participate in the bundled cable and paid pay television ecosystem.”
Wait, but won’t this hurt Fox News and other linear programming?
Though linear TV has been in steady decline, Fox News still boasts the highest ratings among the cablers. So could this new deal hurt cable bundles and ultimately pull even more viewers away from linear?
Murdoch doesn’t think so.
“Particularly for Fox News, I think the risks are very low,” Murdoch said. “And that’s because of the focus of the sports product being on the cord nevers. Fox News continues to be the top-rated cable network, and our distributors, our partners, really value that channel and that brand as it really drives tremendous viewership and audience engagement for them.”
According to Murdoch, Fox News will continue to drive that viewership unscathed in the traditional cable and pay TV bundles.
“We are confident that this product will be additive and will give us incremental subscribers and not affect significantly the traditional bundle,” Murdoch said.
What will this new combined streamer look like?
Murdoch didn’t get into details about the look of the streamer but said he had seen prototypes.
According to the Fox CEO, the new combined product will be “unique” and “very innovative” when it launches. However, further details remain under wraps.
Since this is a combined product, does this change how Fox goes after sports rights?
With sports enjoying growing ratings even amid a linear decline, the market is getting increasingly competitive outside of traditional broadcasters. For instance, Netflix recently inked a multi-billion dollar deal with WWE for rights, making a big move in the live-viewing space.
Even with the streamer being a combined product, Murdoch said the company’s approach to rights is unchanged.
“We will be aggressively competing in the sports market for sports rights. Nothing has changed there,” Murdoch said. “The primary business and value in Fox Sports is competing in for every subscriber in the traditional cable pay TV bundle, viewer and ultimately advertiser.”
Could more partners join?
Some industry experts were surprised other major broadcast owners, such as Paramount and NBCUniversal, weren’t in the initial announcements. And it doesn’t seem like they’ll join anytime soon.
“That’s not something that we’re considering at this stage,” Murdoch said about adding partners. “We think that the 14 linear networks that this service gives people a tremendous amount of content.”
The Fox CEO noted that the deal covers NFL, NBA, WNBA, Major League Baseball, NHL, college sports, NASCAR and more.
Lastly, what about advertising?
With ESPN, WBD and Fox splitting the sports streaming ownership into thirds, advertising remains a major question. And it’s obviously a topic that’s top-of-mind for Fox, as the company announced that profit fell in the second fiscal quarter due in part to a 20% dip in advertising revenue thanks to the absence of a major sporting event like the FIFA Men’s World Cup.
Murdoch explained that advertising will “flow-through” the new combined streamer, providing even more opportunity.
“The advertising that we have on our linear networks will flow into this service and will just give us increased reach to a market that hasn’t seen that advertiser engage with those clients before,” Murdoch said. “So we think it’s a net positive.”