Fox Corp. CEO Lachlan Murdoch is confident that the company’s new sports venture with Disney and Warner Bros. Discovery will not threaten Fox’s pay-TV business but instead be a valuable addition. The announcement of this venture has caused quite a stir in the media industry, with many eagerly awaiting more details. During Fox’s quarterly earnings call, Murdoch addressed concerns about a decline in advertising revenue and emphasized the potential of this new venture.
Murdoch highlighted that the target market for this venture is currently outside the traditional pay-TV bundle, referring to them as “cord-nevers.” These are customers who have never subscribed to pay-TV services. Murdoch sees this as a significant opportunity, with tens of millions of potential customers. He believes that by offering a package that includes 14 linear networks alongside Max, Hulu, and ESPN+, they can tap into this untapped market without undermining the traditional bundle.
It’s important to note that the programming licenses for this venture are non-exclusive, meaning that the sports content being carried won’t be exclusive to this service. This decision was made after conducting thorough sensitivity analysis to ensure that it would not significantly affect Fox’s pay-TV affiliate partners. Murdoch reassured analysts that the big bundle, which includes all programming at an affordable price, is still the best option for consumers who want it all. He expressed confidence that this new product will enhance the existing offerings.
The portfolio of networks included in this service is described as “tremendous” and represents the majority of sports in the country. However, Murdoch clarified that they are not considering additional partners like NBCUniversal at this time. The member companies involved in this joint venture have been working for months to finalize the initiative, and Murdoch has seen initial prototypes that he believes will make the streaming service unique and innovative.
When asked about the risk to Fox’s profit engine, Fox News, Murdoch stated that it was relatively low due to the focus on cord-nevers. He emphasized that Fox News is highly valued by their distributors and partners.
Overall, Murdoch’s confidence in this new sports venture with Disney and Warner Bros. Discovery is evident. He believes that by targeting the cord-nevers market and offering a unique and innovative streaming service, they can expand their reach without jeopardizing their existing pay-TV business. The industry eagerly awaits further details about the pricing, branding, and launch of this exciting new venture.