Why Sports Hulu Could Fail
I’m a sunny optimist as a rule, but I’m also cognizant of times when Disney announces something that may struggle.
For instance, the price of Star Wars: Galactic Starcruiser always concerned me, and I was openly incredulous when Disney named Bob Chapek CEO.
Photo: Charles Krupa/AP
I recently wrote about Disney’s vision for the so-called Sports Hulu skinny bundle planned for the fall of 2024.
While I love the idea and the players involved, there’s certainly no guarantee of success for this project.
Here are several reasons why Sports Hulu could fail.
Antitrust Issues
Photo:ofx.ie
One of the first concerns my attorney friends had with this deal has come into the limelight.
Bloomberg Law reported that the United States Department of Justice will scrutinize this deal carefully.
According to the report, DOJ officials have expressed “concerns it could harm consumers, sports leagues and rivals.”
The Walt Disney Company
When Disney, Fox, and Warner Bros. Discovery announced this project, they informed reporters about their plans.
Specifically, this collaboration won’t involve collective bargaining.
Instead, each of the three corporations will bid on their current individual sports rights.
Photo: Disney
The collaboration stems from offering a skinny bundle with all the sports channels these companies control.
Theoretically, should Disney want to bid on the NCAA Basketball Tournament, one of the few college sports tournaments it lacks, it must do so on its own.
Credit: Disney
Still, concerns arise over how much Disney would bother to bid. After all, it would be a one-third partner in a bundle that owns those rights.
Obviously, everything we’re discussing here is theoretical until all three parties sign the final contractual agreement.
Until then, even the DOJ is speculating about such potential negotiations.
Credit: Disney
Importantly, nobody will know for sure until various content partners indicate they’re okay with this deal.
And that brings me to…
Unhappy Content Partners
The problem with keeping something secret is that you usually know that it’s not something other people want to hear.
You keep quiet to prevent a firestorm of gossip and/or criticism.
The corporate partners kept Sports Hulu a secret for similar reasons.
Photo: THIERRY CHESNOT/GETTY IMAGES
Now that the word is out, some powerful allies…aren’t happy.
Right on cue, here’s a report from Daniel Frankel of NextTV.
Photo:cnet.com
The headline is “Top NFL Execs Reportedly Furious at Disney, Fox and WBD About ‘Being Left in the Dark’ About New Joint Streaming Venture.”
Folks, NFL Commissioner Roger Goodell isn’t someone you want furious with you.
Photo: NFL
That dude runs the company with the highest-rated television broadcast since the Moon Landing!
If that guy’s your enemy, your friends aren’t gonna have your back.
A respected reporter named John Ourand indicates that Goodell asked “lawyers (to) look at the league’s TV contracts with ESPN and Fox to see if there was any way they could stop (Sports Hulu).”
Goodell has already literally tried to stop this project before it even got off the ground!
Photo: D23
As a reminder, Disney and the NFL are currently negotiating a deal that would give the latter partner equity in ESPN.
You really don’t want a potential partner furious with you during the negotiations. Ask any divorce lawyer if you don’t believe me.
I should mention that this is merely one league’s icy reception. Nobody else knew about it, either.
Photo: People
So, we can expect equally salty responses from MLB, the NBA, and other professional/collegiate sports groups.
Still, the one that matters most is the NFL since it claimed 93 of the 100 most-watched programs in 2023.
If Roger Goodell is against this deal, that’s reason enough to worry about its viability.
Ego
Photo: Disney
While I’m friends with a disproportionately large number of attorneys, most of my friends, as you might imagine, are creatives.
When you produce content on the internet for a quarter-century, you bump into people, with coworkers often becoming friends.
Photo: Disney
Virtually every friend I have who has worked in creative can tell a story about a shockingly greedy and/or short-sighted executive.
I’ve encountered my fair share as well, but some of the stories I’ve heard would melt your mind.
I’ll be blunt. Many of these stories involve Fox executives and those who worked under David Zaslav.
Photo: Variety.com
Anyone who watched television at the turn of the century is acutely aware of how many poor decisions Fox executives made.
Nothing really changed over the years, as the underlying issues are systemic.
There’s a reason why Disney kept so few of Fox’s television executives when it acquired those assets.
Photo: ESPN
To be fair, Fox’s sports division has always been run by more qualified people…but they’re not ESPN-level good.
As for the underlings of David Zaslav at WBD, they somehow succeed in spite of corporate meddling.
For example, Turner Sports runs the best NBA product in existence.
Still, we’re talking about three otherwise unaffiliated groups of powerful executives, people who historically haven’t answered to many.
Now, we’re gonna shove them together and hope for the best.
Many years ago, Quincy Jones addressed this issue during the Band-Aid recording by posting a sign. It read, “Check your ego at the door.”
Sports Hulu is gonna need that message added as an attachment in every email and appended to every text.
Money/Greed
Those of you who listen to my media podcast, Streaming into the Void, know that I hold Zaslav in the lowest possible esteem.
If he could save the jobs of 2,000 workers or $100 million from his company’s bottom line, those people are heading to the unemployment line.
This dude might be the real-world iteration of C. Montgomery Burns.
Photo: skillastics.com
Dealing with him on financial issues is like trying to get the money when the check arrives, and your cheapest friend has gone missing.
Then, there’s the other involved party, who is the son of…Rupert Murdoch.
The Sports Hulu announcement promised a generous three-way split of revenue that rewards all parties equally.
Photo: D23
We know this is possible because we watched it happen with Hulu.
However, we also remember how that ended. One party bought another, leaving a third to complain for five years.
When Disney purchased Fox’s assets, Comcast naively trusted the two-third owner of Hulu to boost its value.
Photo: Deadline
Disney possessed no financial incentive to do so, as this tactic would have increased its eventual Comcast payout.
Comcast sold its share of Hulu to Disney in November.
We still don’t know the final cost since arbitrators are still arguing the point.
And I may be using Hulu as the best-case scenario here!
Hulu still exists and has dramatically increased in value to at least $25 billion.
Photo: Washington Post
If we’re looking at Sports Hulu in 15 years as an entity worth $25 billion, it has exceeded all reasonable expectations.
However, as you can see here, there are plenty of good reasons why Sports Hulu will fail and possibly fail mightily.
Update: in the time between when I wrote this article and it was published, FuboTV has sued all three companies over antitrust claims. So, yeah.
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