Credit Agency Says Disney, Fox, WBD Sports Streamer Won’t Harm Sports Leagues, but Will Be Bad for Cable Companies

Almost two months after the joint venture streaming platform from Disney, Fox, and Warner Bros. Discovery was first announced, top financial analysts are releasing their initial reports on what effects the service could have on the larger TV ecosystem. Sportico has details from a report from Fitch Ratings, and the findings back up initial reactions made by The Streamable's own experts: the JV service could be bad news for traditional pay-TV companies, while sports leagues are unlikely to lose anything in the near term from the streamer’s creation.

• Fitch says that because the companies that own the JV platform will still be bidding on sports, rather than the streamer itself, the impact on leagues will be minimal.
• The credit agency was less rosy regarding the streamer’s effects on cable and satellite companies, and thinks it will accelerate cord-cutting.
• The agency’s findings could aid Fubo’s legal arguments that the JV streamer creates an anticompetitive environment and violates antitrust laws.

Numerous reports indicate that Disney, Fox, and WBD did not check in with sports leagues before announcing the creation of their JV platform. The public reaction from top league officials has been very muted, but soon after the streamer’s announcement word began to circulate that the NFL was looking into its contracts with Disney and Fox to see if there was any legal way for it to prevent its games from airing on the platform.

Fitch’s analysis indicates there may not be much for the NFL or other top leagues to fear from the platform. The credit agency expects the JV streamer to have a neutral effect on leagues, at least in the short term. Its potential to cannibalize audiences who were formerly watching the same games on linear television is high, but it will not be responsible for making deals with the leagues itself. Disney, Fox, and WBD already have multi-year deals with some leagues in place and will continue to bid against each other for sports rights despite the JV.

Fitch’s report indicates these existing deals “are a key credit strength for leagues, providing revenue stability as media companies bear the risks of audience engagement and subscriber churn.”

The JV streamer presents a clear problem for traditional distributors of cable channels, however. According to Fitch, its introduction would “accelerate the decline in profits generated by existing linear distribution platforms, including non-sports cable networks, and further compress linear platform profitability.”

The Fitch report does not have many insights as far as the JV streamer’s implications for customers, but recent data from Civic Science shows that viewers are wary of streaming bundles with high prices. It found that 76% of audiences are concerned streaming bundles will lead to higher prices, and in the case of the JV streamer those fears could be well-founded; initial reports indicate the platform could cost as much as $50 per month.

Does New Fitch Report Help Fubo?

Fitch’s findings regarding the JV sports streamer’s implications for traditional cable and satellite companies could help Fubo make its case against the platform in court. Fubo has filed an antitrust lawsuit against the service, alleging it will drive cable channel distributors out of business by offering popular channels at a much lower price point than a standard cable plan.

(buy-block: fubotv_

According to Fitch, there is at least some threat of that outcome. Fox CEO Lachlan Murdoch and other executives involved have insisted the JV streamer is intended to target “cord-never” customers who do not engage with traditional pay-TV services, and that its sports-focused programming will narrow its potential subscriber base even further.

Despite these claims from Murdoch and others, there’s a huge segment of customers who appear to be just waiting for an excuse to cancel their cable or satellite plan. One recent survey found that in the fourth quarter of 2023, 15% of viewers decreased the amount of time they spent watching cable or satellite by 75% or more, but did not fully quit their pay-TV service. Another 11.8% of pay-TV viewers reduced the amount of time that they spent watching their plan by 50% to 75%. In other words, more than a quarter of current cable and satellite customers find themselves watching far less linear TV than they used to, and once the JV streamer comes along they may bolt their expensive plans in favor of a slimmed-down platform that carries all the sports they want without news and entertainment channels they don’t watch.

Disney, Fox, and WBD still have a ton of work to do before their JV streamer can hit the market; the platform just named a CEO, who will have plenty of items to cross off his checklist if a planned fall 2024 launch date is to be achieved. According to the credit agency Fitch Ratings, sports leagues don’t have to worry about a revenue drop-off thanks to the platform, but traditional cable channel distributors had better be looking over their shoulders.