Could Regulators or Sports Leagues Derail Disney, Fox, Warner Bros. Discovery Sports Streaming Joint Venture?

Last week, viewers were astounded to hear that Disney, Fox, and Warner Bros. Discovery had decided to pool their sports rights for a new streaming service that will launch this fall. Sports leagues were just as surprised; reports indicate that the NFL, MLB, NBA, NHL, and other leagues had no prior warning from these companies that the announcement was coming. That may well leave customers feeling anxious that the streamer could be scuttled by one of the leagues in question, or by government regulators who could have concerns about competitive harm.

• New Street Research analysts believe that in the short-term, there is no threat from regulators to the new streamer.
• MLB commissioner Rob Manfred has signaled his support for the new sports streamer, but officials from other leagues have not weighed in.
• Fubo executives were quick to signal their disapproval, citing anti-competitive concerns about the proposed streaming service when it was announced.

What Will Government Regulators Think of New Sports Streaming Service?

On the surface, there might be ample reason for regulators to at least take a closer look at the proposal by Disney, Fox, and WBD to combine their sports rights on a single streaming platform. After all, that streamer would carry rights to games from all the major sports leagues in the United States, as well as college sports from the biggest conferences that currently air on ESPN, TNT, Fox, and other channels owned by the three companies.

But a note from New Street Research analysts — as reported by CableFax — reveals that those in the know about practices of government regulators think there’s little risk of problems in that regard. New Street analyst Blair Levin writes that the deal probably won’t need approval from the Federal Communications Commission, meaning that the biggest risk comes from the Department of Justice, which could later decide that the proposed streaming service may entail competitive harm to the industry in the long term. It helps that the companies in question have friends on both sides of the aisle in Congress, as well.

“We don’t think the DOJ will, but we think other parties may well urge such an investigation and that may reveal facts that would cause us to change our view,” Levin wrote. “We don’t think the combination, from a consumer perspective, reduces competition as the current owners of sports programming continue to own and offer such programming but are just repackaging and rebundling it. But again, facts may emerge down the road suggesting that while the combination may not reduce choices in the short-term, it will lead to a dynamic in the long-term.”

How do Sports Leagues Feel About The Joint Venture Streamer?

The Wall Street Journal confirms that most sports league officials found out about the JV sports streamer when reports of its creation first hit the internet. Since then, most leagues have issued bland statements about the proposal, but no detailed responses.

MLB commissioner Rob Manfred is an exception. When asked about the platform at an owners’ meeting last week, Manfred got the chance to give the joint venture his seal of approval.

“I see that development as positive,” he said of the proposed streamer. “I think it is another place that’s going to need to buy rights in order to make the platform go, and compelling, and I think it’s good to have another buyer. I think it’s particularly good for us — you think about it, it’s our three biggest partners, right? All positive.”

The NBA struck an optimistic tone when issuing its statement about the streamer.

“While we look forward to learning more about this new venture, we’re encouraged by the opportunity to make premier sports content more accessible to fans who are not subscribers to the traditional cable or satellite bundle,” an NBA spokesperson said.

The NFL, which already makes use of streaming platforms like ESPN+, Paramount+, Peacock, and Prime Video to distribute its games, gave the blandest statement of all when learning of the new streaming platform.

“We’re aware of yesterday’s announcement and are still gathering details to understand this proposed new streaming service,” said NFL spokesperson Alex Reithmiller.

It’s clear that sports leagues want more details from Disney, Fox, and WBD before deciding whether or not to raise objections. Giving fans another way to access games from these leagues will obviously be desirable from the perspective of executives, but sports leagues still make substantial revenue from the cable model. They may be hesitant to fully embrace a streaming service that seemingly encourages people to leave traditional pay TV behind.

That encouragement is exactly why Fubo objected so strenuously when hearing about the new JV streamer. Fubo warned the streamer could lead to reduced competition and higher prices, which are possibilities if the Disney/Fox/WBD service manages to drive some cable providers out of business.

Customers will still have the option to watch sports whose rights are owned by Disney, Fox, and WBD outside the streaming platform once it launches, through cable plans or other streamers like Max. Disney may decide to keep ESPN+ as a standalone streaming platform to stave off concerns about a lack of choice for its consumers, even though all of its content is intended to be merged onto the JV platform.

It sounds like there is potential for sports leagues to give the new streamer their approval, or at least grudging acquiescence. League executives will have to be convinced the platform won’t lead to a loss of revenue for them in the long term, but if Disney, Fox, and WBD can manage that and tamp down any concerns that arise from regulators, it could be full steam ahead for their joint venture sports streaming platform.