ESPN, Fox, and Warner Bros. Discovery promise a groundbreaking sports app

I won’t pretend to be much of a sportsball enthusiast—apart from when the Rugby World Cup comes around every four years: Go Bokke!—but it is interesting to observe streaming’s unstoppable conquest of viewers’ eyeballs. And on that front, Disney’s ESPN, Fox, and Warner Bros. Discovery (WBD) just announced what looks likely to be a milestone event.

Many if not most cable TV subscribers are only still in it for the sports, and now they may get less of a reason to hang on. As announced yesterday, the three media majors will pool their most popular sports programming into a new app (which as yet has neither a name nor pricing) that will launch in the fall, in time for NFL and college football, and that will be bundle-able with Disney+, Hulu, and Max. Expect games from the NFL, MLB, NBA, NHL, and many other sporty American TLAs, as well as more globally relevant fare such as the FIFA soccer World Cup, Grand Slam tennis, and so on.

Disney CEO Bob Iger called the move “a major win for sports fans, and an important step forward for the media business.” Fox CEO Lachlan Murdoch hailed “an array of amazing sports content all in one place,” and WBD CEO David Zaslav claimed the app’s announcement “exemplifies our ability as an industry to drive innovation and provide consumers with more choice, enjoyment, and value.”

Again, there’s no word on pricing yet, so the precise level of value is, er, TBD (these initialisms are contagious). It’s unlikely to be cheap—live sports rights are getting ever more expensive—but one anonymous executive told Bloomberg it would sit somewhere between stand-alone streaming offerings like ESPN+ ($11 a month) and the likes of YouTube TV ($73 a month), which may make sense for an awful lot of people.

Madison and Wall media analyst Brian Wieser, in a research note quoted by Bloomberg: “Combining as many sports rights into one platform as possible could help persuade sports fans to embrace such a service … This would also accelerate the pace of decline of traditional pay TV because there would be very little that would be unique to those traditional services.” Comcast’s and Charter’s shares are unsurprisingly down today.

Some of the financial details seem to have already been worked out. The Information reports that, although ESPN, Fox, and WBD will each own a third of the joint venture, each partner’s revenue share will be a function of their existing affiliate fees for cable TV operators; ESPN’s is the most expensive, so it will get more than Fox and WBD. But the three still need to negotiate definitive agreements before this app can become a reality.

Industry execs are reportedly calling this joint venture the “Hulu of sports” in reference to the nature of that streaming service’s let’s-all-hold-hands genesis. Of course, the Hulu consortium turned out to be full of intrigue, particularly when Disney’s 21st Century Fox purchase gave it a controlling stake and the company ended up launching a competing product, Disney+, that has now all but swallowed up now-Disney-owned Hulu. Per The Information, the new JV won’t stop Disney from launching a full ESPN streaming product in the coming years.

And then there’s the timing of this partnership among the three biggest sports media players in the U.S. “This joint venture is being undertaken during a time when the Department of Justice is itself almost obsessive about opposing mergers, particularly those whereby big companies become even more dominant,” said St. John’s University law professor Anthony Sabino in an emailed statement. “And remember, there is a proactive DOJ Antitrust Division (and an FTC, too) emboldened by a recent big win blocking the proposed JetBlue/Spirit Airlines merger. If the administration in Washington, D.C., worked so strenuously to block an airline merger, one can only anticipate those same agencies will be apoplectic over this.”

Looks like some drama will be bundled with the big game. More news below.

David Meyer

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NEWSWORTHY

D’oh, Snap. Snap’s share price dove 34% after its latest quarterly earnings report and forecast disappointed analysts. Snap, which just announced major staffing cuts, blamed the war in the Middle East for throttling its growth, CNBC reports. The company also for the first time revealed uptake figures for its Snapchat+ subscription service—apparently 7 million in the last quarter, up from 5 million in Q3.

AI watermarks advance. OpenAI is adding made-by-AI watermarks to the metadata of images generated by its DALL-E 3 system. As The Verge notes, it’s using the Content Credential standard from the Coalition for Content Provenance and Authenticity (C2PA), whose members also include Adobe and Microsoft. OpenAI admits that metadata-based watermarks are easy to bypass through actions as simple as taking a screenshot of the image. Meanwhile, Meta says it’s working on “industry-leading tools” that can spot when images are marked using C2PA and similar standards, so it can clearly label them on its platforms.

SpaceX civil rights probe. Another Elon Musk business is being investigated by California regulators. Shortly after Tesla settled a toxic-waste case, it has emerged that SpaceX is being probed by the California Civil Rights Department. As Reuters reports, the agency is looking into claims of widespread sexual discrimination and harassment at SpaceX. Several engineers who have complained are already the subject of a U.S. National Labor Relations Board suit against the company.

ON OUR FEED

“We are waiting for the competition to arrive.”

—Microsoft CEO Satya Nadella is confident that GPT-4, produced by Microsoft investee OpenAI, is streets ahead of other large language models. For now.

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On AI regulation, the EU and the U.K. set wildly divergent courses, by Jeremy Kahn

Exclusive: What Andreessen Horowitz’s Anish Acharya is looking for in consumer AI startups, by Allie Garfinkle

Taylor Swift’s Elon Era? Pop star’s lawyers send the ElonJet tracker kid a cease-and-desist letter, saying it’s a ‘life-or-death matter,’ by Paolo Confino

Spotify CEO Daniel Ek unloads on Apple by calling its compliance with new EU antitrust rules ‘a farce,’ by Rachyl Jones

Tesla sold just one electric car in South Korea last month as some Korean consumers worry about vehicles made in China, by Bloomberg

Biden’s ‘kitchen table conversations’ with normal people are going viral on TikTok—which his campaign doesn’t use due to national security concerns, by the Associated Press

BEFORE YOU GO

WhatsApp’s open rules. Meta-owned WhatsApp is one of the many big platforms that’s having to open up to comply with the EU’s new Digital Markets Act that takes effect next month, and its engineering director Dick Brouwer has done an interesting interview with Wired about how it intends to manage this new interoperability with rivals.

A few things leapt out at me. First, full details of the agreement that other messaging platforms will have to sign to gain WhatsApp interoperability will only arrive next month, giving WhatsApp several months to then implement it. Second, WhatsApp would prefer that the others use the same underlying Signal encryption protocol, but if they don’t, it still seems kind of fuzzy how the interplay will work in a secure fashion.

Also, despite the fact that WhatsApp will seemingly get to dictate its terms to other platforms seeking a link-up, Brouwer said users must be given the chance to opt into interoperability, “because it could be a big source of spam and scams.” Let’s see whether WhatsApp tries to scare its users off tapping into the new facility—and whether the European Commission sees this as being compatible with the new law. Either way, it looks like the concept of secure messaging interoperability will soon be put to the test.