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When news broke on February 6th that Disney, Fox, and Warner were joining forces for a mega sports streaming service the feedback was swift: it was the long-awaited inevitable return to cable.
Now, it appears as if the brakes will have to be pumped on the joint streaming service after a report from Bloomberg Law’s Leah Nylen and Todd Shields suggests the Department of Justice will want to review the proposed streaming service for potential antitrust concerns.
In the time since the joint sports streaming bundle was announced, Citi analysts have released an estimate the venture would control approximately 55% of all US sports rights. Bloomberg cites that as $14.4 billion of the $26.7 billion in sports rights cost for all of 2024.
ESPN announced the joint venture with highlights including:
By subscribing to this focused, all-in-one premier sports service, fans would have access to the linear sports networks including ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, ABC, FOX, FS1, FS2, BTN, TNT, TBS, truTV, as well as ESPN+.
Offering to include NFL, NBA, WNBA, MLB, NHL, NASCAR, College Sports, UFC, PGA TOUR Golf, Grand Slam Tennis, the FIFA World Cup, Cycling and Much More
At the crux of the concerns is this removing options for consumers. When 55% of all rights are held by one service, consumers could be the ones that suffer the most due to a complete and utter lack of competition.
One of the primary reasons a probe seems inevitable, according to the industry insiders, is due to the Department of Justice involving itself more frequently in the world of sports with a current probe into the PGA Tour over allegations it’s pressured players preventing them leaving to LIV. The DOJ has also joined an antitrust suit against the NCAA over restrictions on players being able to transfer and maintain eligibility.
The report claims this ‘super streaming service’ will be anything but easy to pull off:
Even those who think the streaming deal will eventually be cleared think it may face a marathon review before reaching the finish line. Paul Gallant, an analyst for Cowen & Co., said in a note to clients that regulators are likely to look at whether the joint venture would discourage Warner, Fox and Disney from bidding against each other for specific sports rights. In previous cases, the Justice Department was reluctant to bless cable bundles between too many players, according to Salop, the Georgetown professor.
In 1983, the agency blocked a joint venture between Viacom’s Showtime and The Movie Channel, then owned by Warner and American Express Co. The partnership sought to combine two of the three leading providers of paid programming for cable subscribers and involved three of the six major Hollywood studios, which controlled between 40% and 50% of theatrical releases each year.
Oddly, in the midst of all this, Disney still plans to launch a standalone ESPN streaming service featuring its flagship products that aren’t currently available on ESPN+. Furthermore, Disney Chief Financial Officer Hugh Johnston told Bloomberg the three media giants would still be competing against each other for the streaming rights of various leagues.
Who wants this Disney, Fox, Warner Streaming Service?
From the moment this Disney, Fox, and Warner joint venture was announced it felt important to consider who actually wants this?
Consumers fleeing cable would love more access to sports, of course, through streaming options. But on the surface this has all been presented as something akin to a return to cable, the exact thing cord cutters have been running from.
The various leagues (NBA, NFL, MLB, NHL, etc) wouldn’t seem to benefit as 55% of the streaming rights holders would be bound together through a joint service.
At the end of the day, it seems like it really would be Disney, Fox, and Warner who win and while they can make a case that consumers would benefit from a unified product it seems unlikely to be the case given lack of competition and historical precedent.