Fox Expects Sports Streaming Venture With Disney And WBD To Hit 5M Subscribers In 5 Years, Lachlan Murdoch Says

Dade Hayes
·3 min read
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The forthcoming sports streaming venture backed by Disney, Fox Corp. and Warner Bros. Discovery will reach 5 million subscribers in its first five years, according to a projection shared Monday by Fox CEO Lachlan Murdoch.

Speaking at a conference hosted by Morgan Stanley, Murdoch cited the forecast in responding to questions about whether the new venture would threaten the company’s existing pay-TV business.

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Fox has “built our plans around” the 5 million subscriber benchmark, Murdoch said. “Some of the talk around this being in the teens or 20 million subs, we don’t think that’s the case.”

The JV “is a very good business for us” given the tens of millions of “cord-nevers” who want a cheaper way to access sports, the exec said. Those sports subscribers will be “incremental to our base.”

The sports venture was announced last month, but details remain scant apart from its planned launch date this fall. The biggest missing piece is pricing. Murdoch didn’t challenge moderator Ben Swinburne when he stipulated a range of $40 to $50 a month. He also said the price point “is going to be in the higher ranges of what people have talked about,” implying potentially north of $50. Rather than bringing streaming-only programming to market, the service will bring together 14 linear network feeds from the JV’s member companies, offering coverage of the NFL, NBA, NHL, Major League Baseball. Paramount and NBCUniversal, significantly, are not part of the offering. Murdoch also said additional elements like regional sports networks or full-season offerings from leagues are not in the near-term offing.

Despite continued strength in viewership, especially for the NFL and college football, sports programming is facing a complex picture in terms of shifting consumer habit. With several million households dropping out of the pay-TV bundle each year, there is a growing urgency for all stakeholders to establish a presence in streaming. Disney is aiming to launch a stand-alone version of ESPN as a streaming offering in addition to supporting the JV.

Murdoch said he does not expect any regulatory hassles as the JV approaches the market. Neither does he see any downside risk to the company’s valuable Fox News distribution base.

“We have obviously done a lot of work on this. We’ve thought about it extensively,” Murdoch said. There has been “a lot of hyperventilation about it,” he continued, but in practice it will operate “like a vMVPD” such as YouTube TV or Hulu + Live TV. The JV members “will get paid per subscriber, just as if we were selling to a vMVPD,” Murdoch said. Given its price point, he continued, the financial returns can still be robust even with a subscriber count in the low seven figures, which is relatively marginal in the scope of the overall streaming business.

Unlike many of its peers, Fox has not invested in a subscription streaming outlet of its own. While that seemed like a liability in 2019 when it was embarking on a new corporate chapter after the sale of most of its assets to Disney, it has turned into a point of pride. Rather than having to pour billions into another Netflix competitor, Fox says it can embrace its linear roots and emphasize live news and sports.

Asked to reflect on that stance in light of the sports JV, Murdoch said, “We’re not going back into the arena. We’re out of the streaming arena, from an entertainment perspective. In the entertainment streaming wars, the arena is like a sea of blood. Everyone’s bled out and we’re happy not to engage in it.” That said, he noted, “we’ve always said we’re distribution agnostic.”

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