- Fox is launching a new streamer into a crowded market. Some analysts say it’s a smart bet.
- Fox’s existing sports rights arsenal, though fragmented, will make it relatively cheap to assemble.
- A streaming service could tee Fox up for future bundling negotiations, one analyst predicted.
Fox is arriving very late to the streaming party with a new paid service set to launch by year’s end. That might not be such a bad idea.
The streaming field is crowded, and a slew of competitors are brawling for subscribers and seeking profitability as they chase Netflix.
On top of that, Fox already has a paid streaming service, Fox Nation, which launched in 2018 and is stocked with right-wing news and documentary content. Fox also has Tubi, a general-interest free streamer.
So, why is it launching a new one? In a nutshell, Fox seems to be trying to wring a small amount of additional value out of the programming it already puts on cable TV.
On an earnings call Tuesday, Murdoch said the forthcoming general-interest streamer, which he didn’t name, would target “cord-cutters and cord-nevers.” He reiterated the importance of Fox’s cable business.
“Our subscriber expectation will be modest, and we’re going to price the service accordingly,” Murdoch added.
Two analysts told Business Insider that Fox’s streaming service could serve as a good backup plan now that it has abandoned sports-focused Venu, its previously planned joint venture with Disney and Warner Bros. Discovery.
“That’s what the market, I think, has wanted — that kind of consolidation,” said Joseph Bonner, a senior securities analyst at Argus Research. “It didn’t work, so now Fox has got to go it alone.”
Fox also has a forthcoming skinny bundle with Disney’s Fubo.
A Fox spokesperson told BI that the stand-alone streamer was part of the company’s initial direct-to-consumer plan.
A ‘low-risk’ strategy
David Joyce, a senior equity analyst at Seaport Research, said Fox’s streaming service “doesn’t seem to have an obvious hole in the marketplace that needs to be filled.” But he said it’s a “low-risk” strategy given the company won’t be spending any further on sports rights.
Sports will be a key differentiator from Fox Nation, though Fox’s offer — which includes college football, Sunday afternoon NFL, NASCAR, and others — is somewhat fragmented, Joyce said. But, he added, “there’s going to be minimal incremental costs because they already have the rights.”
In a note Tuesday, MoffettNathanson wrote the streamer could tee up Fox for future leverage.
“Fox can now use this new DTC service as a tool for future negotiations with linear Pay TV distributors, vMVPDs, and even other streaming services,” the company wrote.
Fox’s stock was up Tuesday largely on the strength of better-than-expected advertising and affiliate fees, Joyce said.
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