The Coming of Age of Sports League

In the Darwinian ecosystem of television, traditional networks are finding the evolutionary leap from linear broadcasting to streaming a perilous transition. The terrain is difficult, the losses are monumental (Disney recorded one of the “better” results with a $500M+ loss in Q4 2023), and the predators—Netflix, Amazon, and YouTube—are voracious. Yet, in the tumult of this transformation, one bastion of content has remained resilient: sports. In 2022, the NFL reigned supreme, taking home 93 out of the top 100 most watched TV broadcasts in 2023. As traditional networks eye a "Hail Mary" pass, they turn to sports content as their field of battle.

In a play that could reconfigure the media landscape, Disney, Fox, and Warner Media have floated the prospect of a joint venture—a new Direct To Consumer (DTC) sports streaming service. The proposition is simple: amalgamate their sports rights under one banner, with whispers of a monthly tariff between $35-$50. Yet, the devil, as ever, is in the details. Leadership remains a question mark (could the architect of Hulu's ascension, Jason Kilar, be the messiah?), consumer appetite for such a service at this price point is untested, the complexity around local/regional sports rights is bewildering, and the technological hurdles are significant. The latter sounds silly, but it may just be the holy grail of sports streaming, which is increasingly intertwined with betting (and time is money, after all!).

Even as this venture takes shape, there looms the inevitable scrutiny of the Department of Justice. Despite the skepticism of many, we posit that approval is likely (despite Fubo ringing the alarm bell). After all, the trio can make a strong argument that this is positive for consumers. It will be easier to find who is streaming what (this is close to home for me since watching the Premier League is a weekly guessing game), and the consolidation may just preempt a potential Amazon and YouTube duopoly, an echo of the digital advertising sphere's fate. The venture may even find a favorable comparison in the likes of VEVO and Hulu—successful precedents of industry titans locking arms.

Strategically, this venture holds the ability to accelerate the great unraveling of traditional cable bundles. No doubt right now, Charter and Disney are already revisiting talks from a mere months ago. Moreover, the sports leagues, sensing the seismic shifts, may demand stakes in the venture, eschewing transient licensing riches for enduring ownership. The precedent is there: Hulu's staggering valuation of $25B and MLB's prescient investment in its own streaming infrastructure are testaments to the value of ownership. The NFL has already made itself heard.

As the networks cast their die with a launch slated for Fall 2024, the venture is fundamentally consumer-friendly. Yet, a legion of challenges await ironing. The deeper strategic plays will prove even more arduous, though not insurmountable. We anticipate that the NBA, with its impending deal renewal, will herald its entry into this venture not with a licensing agreement but with a significant equity stake, setting a precedent for leagues to come.

In sum, this alliance among titans may well be the dawn of a new epoch for sports broadcasting, one that promises to redefine not just how we watch our gladiators but also who profits from the spectacle.