An advertisement for Venu Sports, the sports streaming venture by Disney, Warner Bros. Discovery and Fox, hangs at the Fanatics Fest event in New York City on Aug. 16, 2024.
Jessica Golden | CNBC
With Venu done before it even got out of the starting blocks, Fox Corp., Disney and Warner Bros. Discovery have been mapping out how to go it alone in live sports streaming.
Last month the media giants called off the launch of Venu — a planned direct-to-consumer streaming offering of the entirety of the three companies’ live sports — in the face of headwinds, including cost sensitivity and legal challenges.
The joint venture originally planned to launch the platform ahead of the 2024 NFL season.
However, when its debut got blocked by a U.S. judge, the companies went back to the drawing board, and despite appealing the decision, ultimately decided to move forward alone.
Investors have been keen to hear about each company’s next steps as competition ramps up for streaming subscribers and the traditional TV bundle bleeds customers. While Disney’s ESPN already had a strong foothold in streaming live sports, Venu was a bigger piece of the future for Fox and WBD.
In recent weeks, each company has been detailing their plans. Disney’s ESPN and WBD’s Max appear to be putting more weight behind their already announced or existing platforms. Meanwhile, Fox is taking the plunge into direct-to-consumer streaming.
Disney will shift its focus to the direct-to-consumer ESPN streaming platform, a yet-to-be-named flagship app separate from its ESPN+, that was already in the works before Venu collapsed. ESPN’s flagship app is expected to launch in the fall, and CNBC recently reported that it will add some user generated content in an attempt to attract younger viewers.
This week, WBD executives doubled down on their existing strategy behind streaming service, Max.
On Wednesday the company announced it would include sports and news at no additional cost on the standard and premium tiers of Max. Initially, WBD planned to charge extra for sports. It’s unclear if the reversal was directly related to the end of Venu. Including live sports in the standard Max cost had been part of WBD’s larger strategy discussions for some time, according to a person familiar with the matter.
Unbundling
WBD CEO David Zaslav said during Thursday’s earnings call with investors that one of the key drivers behind Venu was the motivation to put a big library of sports together in one place. He seemed to lament the loss of a singular, sports-centric app, reiterating his belief that bundling content is the best value proposition for consumers and eliminates confusion in finding your favorite leagues or teams.
“It’s not a good consumer experience and the value creation over the last 50 years almost always follows a better consumer experience,” said Zaslav on Thursday, noting WBD’s separate streaming bundle with Disney.
Finding the best value in the bundle has long been Fox’s proposition when staying out of the streaming wars.
Fox took the biggest swing since the dissolution of Venu with plans for its own streaming platform following years of sitting on the sidelines. The company plans to launch an app that offers both news and sports by the end of this year.
The company announced Thursday that it hired Pete Distad, who was previously in charge of Venu, to run its direct-to-consumer streaming service.
Earlier this week at an investor conference, Fox CFO Steve Tomsic said the impending launch of a streaming service shouldn’t be seen as a shift in strategy, noting that Fox isn’t “trying to chase the [streaming] dream that Netflix and Disney and Peacock and Paramount+ are all chasing. That is not our game.”
Fox divested its entertainment assets — a key component to major streaming platforms — in the sale to Disney in 2019, removing Fox from that game, Tomsic said. He added that streaming “does nothing for the consumer” of news and sports, due to how much is sliced and diced on varying platforms.
But rampant cord cutting pushed Fox to step into the streaming game.
“The reality is, as we sit here today, there’s the better part of 50 million households in the U.S. that are now outside the bundle,” Tomsic said this week, adding Fox’s streamer won’t compete with the general entertainment players.
Cost of sports
Live sports have played a pivotal role for media companies as the content that attracts the biggest audiences. This has been true for both traditional TV viewership, as well as streaming platforms looking to grow their subscribers.
In response, the cost of sports rights has ballooned, and media companies have recently become more methodical in what they choose to spend on.
Last week, ESPN stepped away from its long-term relationship with MLB, in part because the price-per-game was getting hard to justify.
And last year, WBD’s Turner Sports lost its rights to air NBA games starting with the 2025-2026 season, but it did pick up some new rights, including to certain college football games and the French Open.
WBD’s Zaslav on Thursday’s earnings call with investors also noted that the company wouldn’t necessarily jump to pay for more sports rights.
“There are sports rights that we can look at opportunistically and say we can make a real return on,” Zaslav said on Thursday’s call. “But you know, we don’t need any more sports anywhere in the world in order to support our business. We buy sports if we think it would enhance our business. And it’s going to get more difficult…[because of] some of those prices being paid.”
During an investor conference in December, Fox’s Tomsic echoed a similar sentiment around sports rights.
Tomsic said while sports are “foundational” to Fox, which notably has the NFL, college football and soccer, the company has “traded in and out” of it in recent years. He highlighted, as examples, that Fox has dropped the NFL’s Thursday Night Football, U.S. Golf and most recently WWE.
When Fox thinks about what makes sense for its sports portfolio, Tomsic said the company looks at the size of the audience and the potential advertising revenue.
“We take a pretty financially hard-nosed view about them, and so we’ll trade in and out of those sports as we see fit,” Tomsic said in December.
Disclosure: Peacock is the streaming service of NBCUniversal, the parent company of CNBC.
