Certain players in the sports TV distribution ecosystem are voicing concern over the newly announced sports streaming joint venture between Disney’s ESPN, Fox and Warner Bros, Discovery.
Industry trade group ACA Connects, which represents more than 500 smaller and independent communications service providers, and sports-focused virtual MVPD Fubo on Wednesday each put out respective statements suggesting the JV is anticompetitive. The joint venture plans to launch a direct-to-consumer streaming service this fall that combines linear sports networks, DTC service and sports rights of the three entities, on a non-exclusive basis, in an all-in-one sports app.
Both entities have stake in the game and could be impacted by the launch of the new sports streaming service.
GlobalData analyst Tammy Parker voiced the view that the JV deal is blockbuster and “will further decimate the traditional US pay-TV sector,” where access to lives sports have been seen as one of the few remaining aspects keeping customers from cutting the cord and paying for expensive cable and satellite TV bundles.
And implications for smaller pay TV providers, some of which are already dealing with how to evolve or shift their video businesses as carriage and retrans fees continue to rise alongside contracting subscriber bases and the proliferation of streaming options, hasn’t gone unnoticed by ACA.
“The ‘house of cards’ in the video marketplace continues to wobble. Allowing the biggest media players to join forces—while locking out traditional linear cable providers from offering the same package at the same price—only gives even more power and leverage to the Goliaths to extract more money from customers of ACA Connects Members,” said ACA Connects President and CEO Grant Spellmeyer in a statement Wednesday responding to the news. “This clearly isn’t a functioning free market. With customers facing higher prices and fewer affordable choices, there needs to be a level playing field.”
Some analysts also pointed to potential risk from the JV to the competitive advantage of Fubo, which offers a cable-like streaming TV lineup but with an emphasis on sports programming that has allowed it to command pricier packages in the streaming world. Some have suggested the unnamed JV streaming service could be priced between $40-50 per month, though no details have officially been announced. Comparatively, Fubo’s least-expensive base package is just under $80 per month following a recent price increase – plus a $13-$15 fee for regional sports networks that nearly all subscribers are subject to.
The vMVPD saw its stock drop drastically Wednesday following the JV news. Later that day Fubo issued a statement acknowledging the JV captured the company’s attention while also reiterating its value proposition and casting doubt on how easy it will be for a sports streaming service to be successful.
“Fubo has consistently championed the principle of consumer choice and we're not surprised more sports streaming options are becoming available. We have already seen that a consortium born of historical competitors is a difficult undertaking, and streaming joint ventures rarely work. As well, we know sports-only programming is highly challenged,” Fubo stated.
It went on to say that Fubo delivers what consumers have demonstrated they’re looking for – namely an aggregated sports, news and entertainment package that differentiates through a quality product experience (one of Fubo’s consistent messages is viewers come for the sports and stay for the added entertainment content and user experience it provides). It also called out features on its live TV streaming service including 4K, multi-view, and AI-powered features like the recently launched Instant Headlines.
While Fubo clearly felt enough pressure that it released a statement, the vMVPD also downplayed the potential impact to its service from the JV. “We believe our robust programming and quality product experience cannot be duplicated by what is likely to emerge from this joint venture,” Fubo continued.
That said, like ACA, Fubo suggested the JV, which brings together assets of three major players, poses issues for fair market competition, saying “the underlying motives and implications of this joint venture also command our scrutiny.”
“Every consumer in America should be concerned about the intent behind this joint venture and its impact on fair market competition,” Fubo stated. “This joint venture spotlights a concerning trend where an alliance with significant market share, reportedly controlling 60-85% of all sports content, could dictate market terms in a manner that may not serve the broader interests of consumers.”
Fubo, which competes against other vMVPDs like YouTube TV, Hulu + Live TV and Dish’s Sling TV, as well as traditional pay TV operators, marked subscriber and revenue growth in Q3. It ended September with about 1.47 million subscribers, after adding around 310,000 in the quarter. The company reports Q4 earnings on March 1.