Disney’s ESPN, FOX, and Warner Bros. Discovery’s plans to jointly form a new super sports streaming bundle this week shocked the entertainment and cable TV world. One of the gut reactions to the news was how this service, which bundles together 14 cable and network channels, would accelerate the bleeding of cable TV customers.
But if you listen to Disney CEO Bob Iger and FOX CEO Lachlan Murdoch, everything will turn out okay.
“We would not be launching this product if it were going to significantly affect our pay TV affiliate partners,” Murdoch told investors on Wednesday during its fourth-quarter earnings call. “We remain the biggest supporter of the traditional pay tv bundle.”
Iger said the JV will attract customers who have already cut the cord or never had cable in the first place. “We believe it’s for sports fans who want to watch sports on TV, but didn’t want to sign up for the big satellite/cable bundle.”
The comments are either in denial, or a half-baked attempt to walk the line between promoting this new venture without completely pissing off its cable and satellite TV partners. Either way, the reality is this streaming service, expected to debut in the fall, is bad news for cable TV. (Warner Bros. Discovery CEO David Zaslav gets his chance to talk about the venture when his company reports earnings later this month)
Live sports has been the last major factor keeping many subscribers from canceling their service. Consulting firm Parks Associates found 40% of US traditional pay-TV subscribers still watch live sports via Legacy pay TV. The joint venture isn’t new content, but just the same package of cable channels sold directly by these media companies – at a discount to the full cable bundle. Depending on how it’s priced, there could be little reason for some cable customers to stick around.
“Fans will have to sign up to this streaming service if they want to watch sports,” said Paolo Pescatore, an analyst at PP Foresight. “Therefore, a fan will churn or cut their existing service for this one. This will naturally happen.”
The JV is already sounding alarm bells.
Fubo CEO David Gandler suggested the Justice Department and Federal Trade Commission might look at this deal with “skepticism” in a post on X (formerly Twitter). It came after his company issued a statement expressing concern about the streaming service.
ACA Connects, a trade group for smaller cable compaines, echoed the sentiment.
“Small cable providers, like ACA Connects members, have wanted access to a la carte and skinny bundle packages for years,” said Grant Spellmeyer, CEO of the group. “The Hollywood CEOs may be saying this won’t crush competition for linear cable, but we’re still waiting on the phone call from them that unlocks this option for our members to offer similar packages with the same terms and conditions to fans. You don’t need a crystal ball to see this proposed juggernaut will abuse market power to siphon off fans and stick them later with higher bills to access sports.”
A spokesman for Comcast wasn’t available to comment. A spokesman for Charter Communications, which owns Spectrum TV, declined to comment.
What About the Consumer?
For consumers, this could take some of the confusion out of figuring out where to watch their favorite teams.
“The joint venture will make it easier for consumers to avoid a guessing game of where their favorite live sports will air,” said Kevin Krim, CEO of TV ad measurement firm EDO. “As a fan of Premier League soccer, myself, I’m constantly trying to figure out whether it’s on a broadcast or cable network, or Peacock.”
Whether consumers will want the service will still depend on the price. Reports surfaced on Thursday that it would cost “more than $30” and possibly hit the $50 mark, but no pricing plans have been firmly laid out yet.
“This could be a win for the sport streaming consumer searching for their game, but it’s likely to come with a steep price,” said Eric Sorensen, director of the streaming video tracker for Parks Associates.
If the venture is aggressive about adding customers, it could set it at a price that makes it irresistible to jump ship from cable.
Even Murdoch and Iger didn’t put up much of a defense of this point when pressed further about cord cutting.
Murdoch failed to offer any specifics about why he thought this venture wouldn’t hurt cable, only reiterating that it would go after “cord nevers” that were already lost to cable.
Iger focused on his own business, noting that this would have similar financial terms to how it gets paid by cable.
“For us, it’s very low risk,” he said.
That’s likely cold comfort for the cable TV industry.