Opening Day Is Set For The Biggest Game In Sports TV

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The teams are ready, opening day is set. And no, I’m not talking about the NFL, though that matters a lot. I’m talking about the imminent arrival of two pricey, sports-focused streaming apps from ESPN and Fox that both launch Aug. 21.

The bigger, and sports-only, entry will come from Disney’s ESPN, which finally replaces an undernourished ESPN+ streaming app with a full-featured direct-to=consumer offering called just ESPN. At $30 a month, it is the most expensive major app in the market, though it also can be acquired as part of a far cheaper bundle with Disney Plus that carries all of Disney’s entertainment and news offerings.

Just before Disney’s earnings call this week, the company announced that the NFL will take a 10-percent stake in ESPN, a groundbreaking deal that can’t have been well received by competitors fearing they’ll get worse matchups as a result. In return, ESPN will operate the league’s NFL Media holdings, including the NFL Network, the fan favorite RedZone Channel and its official fantasy football operation.

A separate deal gives ESPN three more games per season and other league intellectual property to air on the cable NFL Network. And ESPN already has rights to college football and basketball games from the SEC and Big 12 conferences, and the College Football Championship.

In a research note published Thursday, MoffettNathanson analysts led by Robert Fishman and Michael Nathanson called the NFL deal “a major win for ESPN on multiple fronts,” setting a valuation floor for a possible eventual spinoff of ESPN, improving negotiating positions for carriage on various platforms, and removing risk from its shift away from cable to streaming in sports delivery.

MoffettNathanson’s report said the fantasy deal could be particularly important for ESPN, “bringing with it a sticky, high-engagement user base that could help deepen retention of ESPN’s DTC offerings (or even ESPN Bet).”

Disney is separately acquiring Fubo, the virtual network bundle provider that last year successfully sued to block Venu, the sports cable offering that would have featured Disney, Fox and Warner Bros. assets. Fubo’s sports-focused bundles will, after regulatory approvals, be sold alongside those of Disney-owned Hulu Plus Live TV, providing yet another way to connect and keep some of the most ardent audiences in television on whatever delivery device.

“As Disney continues navigating this pivot, the NFL transaction further strengthens ESPN’s brand around football – the most important IP in U.S. media,” MoffettNathanson’s report notes.

Disney also announced a deal with WWE to bring some of the pro wrestling circuit’s sticky regular programming to ESPN. Such programming has been a major hit for Netflix since debuting WWE Raw in January, and Disney is clearly hoping for something of the same regular tune-in power for its sports app.

Fox One will be more than just sports, but Fox CEO Lachlan Murdoch said in an earnings call earlier this week that the $19.99-a-month app will lean on the company’s winning combination of existing sports and news coverage that has kept it in the black since Rupert Murdoch sold off most of the company’s entertainment assets to Disney in 2019.

Fox One won’t offer any original or exclusive content, relying instead of existing programming from Fox’s broadcast network, Fox News Channel and Fox Business Channel. That includes weekly NFL games, Big 10 college football, baseball, European and US soccer, NASCAR and more.

Fox and Disney aren’t the only two players here, though the lineups are rapidly evolving as traditional big media companies restructure themselves for the next era of streaming TV and entertainment distribution.

Among the tech giants with video operations, Amazon has Thursday Night Football from the NFL and will add NBA games this fall under a new deal. Apple TV has an unusual 360-degree deal with Major League Soccer, and also carries Friday night MLB games. It reportedly is in line for an expensive new deal for Formula One racing, on the back of its recent theatrical hit starring Brad Pitt, F1: The Movie.

Netflix has carefully edged into live sports, seeing it as another vector into regular fan tune-in with specific sports events it can own, such as boxing and MMA matches. It just re-upped its rights to two Christmas Day NFL games after last year’s success, and may be the new home for UFC, which is owned by the same company that controls WWE, TKO Holdings.

The sports space beyond those players is even more fractured, as several media companies hope their live-sports portfolios are strong enough to aid tune-in for everything else they do.

Paramount, owner of CBS and the Paramount Plus and Pluto streaming services, for instance, will still have its traditional share of NFL games each weekend and a piece of college football and basketball games from the Big T0 and a revived Pac-12, plus March Madness for men’s and women’s college basketball in the spring.

But Paramount may be distracted by its merger, which closed Thursday, with David Ellison’s Skydance Entertainment, backed by the many billions of dollars of his father, Oracle founder Larry Ellison, and RedBird Capital’s Jerry Cardinale.

David Ellison, speaking on CNBC Friday morning, said the NFL is now a minority partner in Paramount through its existing deal with Skydance Sports. The league has an opt-out provision in its CBS deal in any change of control, but Ellison said, “It’s not something we’re worried about. We’re both committed to being partners.”

That said, negotiations continue with the league, whose most recent rights deal with all its partners also includes a “look-in” provision giving the league and the media companies a chance to opt out in 2029. The league is more likely to prune under-performing partners than the other way around, should it exercise that clause, given the continuing appeal of NFL games to what’s left of audiences for traditional broadcast and cable.

“We believe we’ll be in business with the NFL for the foreseeable future,” Ellison said.

More generally, Ellison said that, while cutting a promised $2 billion in “synergies” out of the combined Paramount-Skydance, “You can’t cut to grow. We’ve all seen that’s a business model that doesn’t work. We’re really going to invest in growth areas like studios and streaming and sports.”

Comcast’s NBC and Peacock have been beefing up their sports offerings beyond their top-0rated Sunday Night Football weekly broadcast, acquiring rights to primetime Big 10 football games this season, including as many as 16 on NBC and Peacock both, and another eight Peacock-only league games.

And the company splashed out hundreds of millions of dollars this time last year to grab rights for some NBA games, including some that will air only on Peacock each week.

Comcast has long held rights to the Winter and Summer Olympics in the United States, and demonstrated the potential power of an integrated approach at last year’s Paris games that spotlighted the most popular sports and matchups on broadcast and cable outlets while allowing hard-core fans to dive deep online into all video of any specific sport in the competition.

Comcast is expected to reprise that approach in February’s Winter games in Milan and Cortina d’Ampezzo, Italy, though it’s unclear how it will work after the spinoff of most NBCUniversal cable networks into a separate company called Versant that is now underway.

Warner Bros. Discovery is also about to split itself into two companies, three years after a big merger brought together WarnerMedia and Discovery Networks.

What’s left in sports after the split will have a considerably smaller footprint, especially given the loss of NBA games each week. What will be called Discovery Global will have the former TNT Sports, now called Bleacher Report, among its cable network holdings. The company still retains rights to some early-round March Madness and College Football Playoff games, among other odds and ends, WBD’s much-loved Inside the NBA show will now be produced by Warner Bros. but run on ESPN each week.