How ESPN, Fox and Warner Bros. Discovery’s new streaming service could impact advertisers

Super Bowl who? As the sports media industry gears up for the Big Game this weekend, Disney, Fox and Warner Bros. Discovery decided to disrupt the festivities with a surprise announcement. The three network groups will be joining forces to create a sports streaming platform that will aggregate each one’s sports programming across at least 15 networks in one platform. Sound familiar? The model isn’t far off from cable packages or previous joint ventures, such as the one between Fox and NBCUniversal that created Hulu in 2007. But in streaming’s current iteration, the implications for the TV market more broadly, and the advertisers that spend millions in it, could be new territory. Check out the latest Ad Age events and award programs The unnamed joint venture, which is currently without leadership, is set to launch in the fall. It seems like it will act purely as a method of content distribution rather than a streamer that will sell its own ad inventory. In a call with investors Wednesday morning, Fox CEO Lachlan Murdoch said advertising on the streamer will be a pure reflection of the ads airing in the same content on the involved linear networks, including ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, ABC, FOX, FS1, FS2, BTN, TNT, TBS, truTV, as well as ESPN+. (Separately, Disney announced Wednesday that it will be releasing a standalone streamer for its ESPN content in 2025.) At least three media buyers said the news of the three-partner streamer was a complete shock when it dropped on Tuesday evening. One buyer said the announcement will likely overtake conversation in Las Vegas this weekend as leadership from brands, agencies and media companies converge for the Super Bowl. The buyer added that their “initial reaction was utter shock that these three legacy media companies got in a room and pulled this off without any whispers of the venture prior.” Super Bowl commercials Tracking the latest brand and agency plans Enter here What does the mega-sports streamer mean for advertisers? The first buyer said they would be meeting with the participating networks’ leadership groups over the weekend. Others said their lists of questions are multiplying by the second. Overall, the hubbub seems to be tempered by the initial indication that this won’t change the workflow of striking deals with each network for sports inventory, even if it suggests larger changes in the future. “At least initially, the way it’s announced, I don’t see anything other than a couple million extra people—I personally think the impact on things like reach will be minimal,” said a second buyer. But the buyer does expect this will further complicate the issue of measurement and transparency from media companies about what impressions are coming from what platforms for content airing across streaming and linear TV. For cable, sports remains the glue holding it all together. And despite tech streamers such as Amazon, YouTube and Apple striking deals with professional sports leagues, cable remains the place to watch the majority of sports content in one place. Some consumers, though, take a more a la carte approach by piecing together schedules across Peacock, Paramount+, Max’s Bleacher Report hub, ESPN+ and other streamers. “People who are sports fanatics—who I would believe this is intended for—have already figured out how to get their sports,” said the second buyer. “Until this offers something new or different, I don’t know what the incentive is going to be for people to add on another proposed $40 to $50 per month for stuff that they currently get” through other platforms. Also read: Streaming TV ads gain in viewer acceptance While the joint venture partners have yet to announce a starting price for the service, many are predicting it will fall between $40 and $50. The second buyer said that their internal research shows consumers consider the total price of TV subscriptions the top consideration for juggling services, and that Disney, Warner Bros. Discovery and Fox’s service is unlikely to hold heavy sway because NFL fans still need NBC and CBS to consume a full season of football, basketball fans need CBS in addition to Warner’s Turner networks to watch all of March Madness and baseball fans need regional networks on top of Fox and ESPN’s national coverage to watch all of a baseball season. The partners are not currently seeking to add more partners, Murdoch said on Fox’s investor call. NBCUniversal, Paramount and Charter declined to comment on the announcement. Cable providers Comcast, DirecTV and Dish didn’t respond to request for comment. The new streamer will be available as an add-on or bundle with Disney’s Hulu and Disney+, as well as Warner Bros. Discovery’s Max, according to the announcement. It will represent a new form of distribution for Fox Sports, as Fox is the only company of the three that doesn’t have a paid streaming service (Tubi is a free streamer). Many predicted 2024 would become the year of the streaming bundle, but the joint venture’s pairing of companies wasn’t the bundle anyone expected. What does it mean for the networks? “My starting assumption is that this is effectively Disney, Warner and Fox going to war with their distributors,” said Brian Wieser, media analyst and founder of Madison and Wall consultancy. What the streamer does is separate cable networks from cable distributors in discussions about the fate of linear TV. Disney, Warner Bros. Discovery and Fox are effectively building an in-house platform that can be used as an alternative to cable as ratings on traditional cable decline. The streamer will also feature content from ABC and Fox, according to the announcement; While the service is currently expected to be sports-oriented, it’s speculated other types of content could follow. Broadly, the subscription price is at the top of every list of questions for the new venture when discussing its potential effectiveness with consumers. “If they price it too low, they accelerate the demise of traditional cable,” Wieser said. “If they price it too high, nobody will adopt the service.” Finding the middle ground may be tricky. The joint venture partners have outlined an equal share of ownership, and it does appear it will exclusively license sports content onto the platform, which would mean games could still be viewed on cable. But one major question remains: Could the platform serve as a way for the companies to aggregate funds for a joint bid in future league media rights deals? As viewership for sports maintains strong ratings on TV, the cost of maintaining each network will only continue to increase. The limit for how much the traditional networks can bid before being priced out, particularly as tech companies with cash to burn enter the space in greater force, has yet to be determined. “My biggest question is will this entity collectively bid on new properties together,” said the first buyer. Whether this hypothetical scenario could lead to antitrust concerns remains to be seen, said Wieser. The analyst pointed to Disney’s acquisition of 21st Century Fox, in which it had to divest portions of Fox’s sports networks to win regulatory approval. “There’s more competition now than was true 10 years ago,” said Wieser. “We can argue that on its face, an antitrust regulator shouldn’t get in the way of this. But if there were concerns in 2018 in a Trump administration, I’ve got to imagine there would be concerns right now.”

How ESPN, Fox and Warner Bros. Discovery’s new streaming service could impact advertisers

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