Walt Disney‘s ESPN, Fox and Warner Bros. Discovery plan to launch a joint sports streaming service this fall, giving consumers a new way to access marquee live sports for the first time, the companies said Tuesday.
The platform, which will be owned by a newly formed company with its own leadership team, does not yet have a name or a price. Disney, Fox and Warner Bros. Discovery will each own a one-third stake.
Consumers would be able to subscribe directly via a new app. Subscribers would also have the ability to bundle the product with the companies’ streaming platforms Disney+, Hulu and Max.
The product will be a skinnier bundle of linear networks than a standard cable offering, specifically tailored for sports fans. It will consist of all the broadcast and cable networks owned by Disney, Fox and Warner Bros. Discovery that carry sports, along with ESPN+.
From Disney, that includes ESPN and its sister networks, such as ESPN2, ESPNU, SECN, ACCN, ESPNEWS, as well as the ABC broadcast network. Warner Bros. Discovery’s networks that showcase sports are TNT, TBS and TruTV. Fox will include the Fox broadcast station along with FS1, FS2 and BTN.
While no price has been determined, a logical starting point could be $45 or $50 per month with introductory pricing lower to entice signups, according to a person familiar with the matter, who asked not to be named because the discussions around the service have been private. A second person added that even with promotional pricing, the service will cost more than $30 per month.
The companies’ longer term goal is to make the platform a home base for sports programming. Hypothetically, independent networks such as The Tennis Channel could be added to improve the offering, one of the people said. While Disney, Warner Bros. Discovery and Fox each will own one-third of the company, the rights fee revenue sharing will be proportional to what the cable networks charge pay TV providers, a second person said.
“The launch of this new streaming sports service is a significant moment for Disney and ESPN, a major win for sports fans, and an important step forward for the media business,” Disney CEO Bob Iger said in a statement. “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.”
The launch of the product will not stop ESPN from offering a full direct-to-consumer streaming product, which Disney is still researching and remains on schedule to debut by 2025, according to a person familiar with the matter. ESPN has previously said it plans on releasing that product this year or next year.
The competitors expect to form the joint service at a time when the value of sports media rights is spiking and viewers have moved away from watching on traditional cable even as ratings for the National Football League and National Basketball Association have spiked.
“While we look forward to learning more about this new venture, we’re encouraged by the opportunity to make premier sports content more accessible to fans who are not subscribers to the traditional cable or satellite bundle,” an NBA spokesperson said.
Comcast‘s NBCUniversal and Paramount Global weren’t approached to be a part of the joint venture, according to people familiar with the matter. NBCUniversal likely would have balked at the idea of unbundling its sports networks from its other entertainment cable channels, one of the people said.
Still, the new skinny bundle may chip away at the number of cable subscribers for both NBCUniversal and Paramount Global. Both companies offer streaming services โ Peacock and Paramount+ โ that offer additional sports, including live National Football League games. That may mitigate potential revenue losses for NBCUniversal and Paramount Global.
Disney, in particular, has sought new ways to reinvent the sports business and ESPN, including searching for strategic partners such as the NFL and NBA.
Don’t miss these stories from CNBC PRO:
