Deep Analysis: the Game-Changing Joint Venture of Warner Bros. Discovery, Fox, and Disney
Currently, the digital sports streaming industry is a hassle for customers because they sign up for several networks and pay multiple subscriptions. However, on February 6th, 2024, there was an announcement for a “solution,” a joint venture between Warner Bros. Discovery, Fox, and Disney. The joint venture will create a single app where viewers can see ESPN, TNT, and Fox Sports content under one roof. Each company would own one-third of the unnamed joint venture, and the new company would pay its three corporate parents for licensing rights, which are nonexclusive. The move highlights that the three corporations are cutting cable and transitioning to streaming.
According to variety.com, the new app’s price tag will be between $30 and $80 monthly, making the cost between a regional sports network and a larger package, such as YouTube TV and Hulu + Live TV. However, the app will not include content from Comcast or Paramount because bringing in more partners would make the cost unbearable for customers. Also, Fox, Disney, and Warner Bros. Discovery own 85% of the U.S. sports rights market, spanning all major sports leagues, so adding Comcast or Paramount would be unnecessary. Yet, the NFL would be the only major sports league with most content not on the app because Comcast owns “Sunday Night Football,” Amazon has “Thursday Night Football,” and CBS has Sunday afternoon games. Still, the joint venture is a giant step for Disney, and the CEO Bob Iger said in a statement, “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.”
Since 2019, Disney has been struggling heavily as a company, with its stock price plummeting by 50% since 2021. Moreover, Disney has yet to reach pre-pandemic levels of free cash flow, suggesting the company is financially unstable. Disney has also been losing subscribers for its Disney+ service and revenue from its TV networks, demonstrating their decline in popularity. Still, Disney’s revenue has been increasing over the past four years, but that is due to cost-cutting measures like laying off 7,000 employees. Surprisingly, Disney has been on the decline in the past few years, contrasting the boom of the E-Sports industry, which I wrote about here.
However, the new joint venture symbolizes a beacon of hope for Disney because it provides them with a service that will be beloved and increase its revenue without severely cutting costs. Moreover, the joint venture implies that Disney will not sell its stake in ESPN, despite rumors, and will continue to invest in its TV content. Similarly, Fox, owned by Disney, and Warner Bros. Discovery are excited to launch the joint venture with management issuing statements paralleling Iger’s.
Overall, the unnamed joint venture will propel the sports streaming industry’s growth as it gains viewers over cable. As a result, Disney, Fox, and Warner Bros. Discovery will each see boosts in subscribers and revenue. The announcement stabilizes Disney’s precarious state as the company makes aggressive yet calculated moves to transition from the declining cable to the developing streaming industry. Ultimately, the new venture represents a new era of sports streaming where multiple companies bundle content into one package, the “Great Rebundling”.
