Disney, Fox, and Warner's Joint Streaming Service Under Review: Concerns Over Sports Rights and Competition

Walt Disney Co DIS, Fox Corp FOX FOXA, and Warner Bros. Discovery Inc WBD are under scrutiny by the Justice Department over their proposed new streaming service, which has raised concerns about potential harm to consumers, media competitors, and sports leagues. 

The regulatory review will commence once the joint venture agreement is completed, though the companies have not formally notified of this pending examination. 

The service plans to amalgamate content from Disney’s ESPN and ABC networks, Fox, and Warner channels such as TNT and TBS, potentially controlling around 55% of US sports rights by cost, Bloomberg reports.

Also Read: Is This The Beginning of The End Of Traditional TV Era?

Objections have been voiced by smaller cable providers and at least one Internet TV service, arguing the service could inflate prices and limit sports leagues’ rights-selling options. 

This initiative falls into a broader pattern of the Justice Department’s attention to antitrust issues within the sports and media industries, including investigations into the PGA Tour and the National Collegiate Athletics Association for potential anti-competitive practices.

The proposed streaming platform aims to consolidate significant sports content, including major leagues like MLB, NBA, NHL, NASCAR, and college basketball. However, NFL coverage would be partial due to rights held by other broadcasters. 

Analysts like Paul Gallant from Cowen & Co. suggest that the deal may undergo a comprehensive review process to determine if it discourages Warner, Fox, and Disney from competitively bidding for specific sports rights. 

In 2023, CEO Bob Iger suggested that not every Disney TV network, including channels like ABC, FX, and National Geographic, is essential to the company’s primary operations.

Reports indicated that Disney’s leadership is evaluating the strategic importance of each network, with possibilities of selling some or transitioning others to their joint venture with Hearst, A+E Networks.

With the advent of streaming services and decreasing traditional TV viewership impacting Disney’s once lucrative TV network sector, the company is investigating ways to reduce costs across its channels while prioritizing networks like ABC, Disney Channel, and FX for their valuable content on Disney’s streaming services, Disney+ and Hulu.

Interestingly, streaming giants including Disney, Paramount Global  PARA, and Netflix Inc NFLX also struggled to win and retain subscribers due to rising prices and cost-of-living concerns, as per recent reports. Close to 25% of U.S. subscribers have canceled at least three primary streaming services in the past two years, up from 15% two years ago.

Disney+ and Netflix saw significant uptake in their ad-supported options, indicating a preference shift towards more cost-effective streaming solutions.

Disney stock gained 6.3% last year versus Netflix at 69.2%.

Price Actions: DIS shares traded lower by 0.40% at $112.01 premarket on the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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