In his capacity as a Columnist for California Sports Lawyer®, Founder and Managing Attorney Jeremy Evans has written a column about Warner Bros. Discovery, Disney (ESPN), and FOX joining forces on creating a new major sports streaming platform to collectively distribute live sports.
You can read the full column below.
Warner Bros. Discovery, ESPN and ABC (owned by Disney), and FOX Sports have agreed to collectively stream their licensed live sports content on one platform in the near future. The announced follows Peacock’s (owned by NBC Universal) exclusive streaming of a National Football League (“NFL”) playoff game in 2024. It also follows Amazon’s announcement that it will exclusively host an NFL playoff game in 2025. Peacock’s massive streaming success was proven by the viewership numbers and the major sports streaming players now want in on the action.
What are some of the implications of exclusive streaming deals? One the one hand, exclusive streaming is no different than exclusive cable or satellite packages except in the path of distribution and that cost to customers to stream games is less expensive than the cost to purchase a cable or satellite package. Streaming and applications on phones and devices can also be accessed from anywhere with an internet or service connection.
However, one concern from the sports leagues is that the combined negotiation power of Warner, Disney, and FOX is one that could split the cost of licensing copyrights to stream. The leverage of these big players could lower the cost overall as one point of dealmaking by sports leagues has been to divide and conquer by splitting up game packages to distributors thus increasing the overall financial package. If the three companies now only have one combined streamer, they could collectively drive the price down unless streamers like Amazon, Apple, Netflix, or others decide to purchase the rights. That seems unlikely based on history and in terms of cost.
In fact, one of the main reasons that Warner, Disney, and FOX decided to join forces on a streamer was to help split the rising cost of live sports rights. Warner, Disney, and Fox also learned their lesson from the Hulu experiment, which led the way in streaming as a joint venture before each of the aforementioned companies created their own streaming platforms or sold off assets, merged, etc., as was the example of the multi-billion dollar sale of FOX’s entertainment assets to Disney. The tri-company effort is nothing more than what investors and owners have learned in purchasing professional sports franchises: more funding in purchasing is better when spread between others.
On the other hand, having one streamer for most major sports from TNT to ESPN to FOX is going to make it much easier for customers to find sports content and watch. The three apart are better working together in getting what customers want, which is easier access, less fractionalization, and lower pricing, or at least fewer payments to separate entities to watch live sports content on multiple platforms. The question will be how long the partnership lasts. The next question will be what happens when the three companies have an opportunity to bid on live sports rights together during the next negotiation. One thing is for sure, the viewership numbers that Peacock saw for the 2024 playoff game will pale in comparison to the customers tuning into the new platform that will be akin to a significant monopoly over live sports rights for an extended period of time. There will also be questions as to journalistic freedom and integrity on a combined platform with less competition. Time will tell.
About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
Copyright © 2024. California Sports Lawyer®. All Rights Reserved.