Commentary

Venu Sports Fallout: Winners And Losers

Collateral damage from the fallout of the proposed Venu Sports shows that its joint-venture partners are in very different positions.

Walt Disney may have been the most iffy among the partners -- with much of the focus on the company getting involved in Venu in the first place.

“We have long held this view and still cannot fully understand why Disney jumped through all these hoops instead of just pushing forward with its own sports-centric skinny bundle strategy,” writes Robert Fishman, media analyst of MoffettNathanson Research.

The overall idea of the Venu joint venture was to amass leverage from the three major legacy TV-network-based companies -- Disney, Fox and Warner Bros. Discovery -- all to compete with strong digital-first streaming companies, Netflix and Amazon Prime Video.

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Sports content is perhaps the most obvious TV/streaming programming that can draw in consumers and advertisers for major revenue monetization.

Now, Disney -- in investing in Fubo, and by spinning off its not-very-profitable Hulu + Live TV -- is sidelined somewhat.

Its Hulu unit might be required to renegotiate distribution deals with cable TV networks and TV stations.

Fishman now wonders whether Disney could streamline its complex streaming platforms, which will now include Fubo and ESPN's "flagship" streaming launch, ESPN+ -- as well as existing Hulu (on demand) and Disney+ (which includes ESPN+ content).

The biggest hit is seemingly coming at Warner Bros. Discovery, which already has had a major sports content setback in not securing another long-term deal with the NBA.

Fishman says WBD was the “odd man out.” This is especially true when it comes to its long-time focus on cable TV networks; it doesn't have a more desirable broadcast network. And that’s not all.

“Indeed, WBD has a lot to lose from a skinny-bundle future given the heavy general entertainment skew of its cable network portfolio.”

Who gains? Seemingly Fox Corp -- especially when it comes to future “skinny bundles” -- legacy, streaming, virtual or otherwise. Ever since 21 Century Fox transitioned to Fox Corp by selling off half of its TV and film businesses to Disney in 2019 for $71.3 billion the new Fox has been a prime position.

Fox’s now a sports-focused sports and news programming on its platforms is a perfect fit for “skinny-bundles”. It made the correct decision to severely downgrade general TV/streaming entertainment back in 2019, ceding that area to the likes of Netflix and Amazon Prime Video.

Think about it. Comcast -- and WBD -- are now working through what Fox foresaw six years ago: Selling off its non-core TV networks (to Disney).

These networks are now trying to catch up in a marketplace where those platforms have significantly lower value. Are clearance sales to come?

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