Key Points:
- Fox’s CEO of Streaming Pete Distad said the company is interested in streaming bundles similar to its forthcoming pairing of Fox One with ESPN Unlimited.
- A high-level Fox executive said the company is still working with Disney and Warner Bros Discovery about streaming bundles, and is interested in similar pacts with Comcast’s NBC Universal and Paramount.
- Fox One is targeted at former cable subscribers; the company priced Fox One high enough to prevent further cable TV churn.
Fox Corporation is eyeing more opportunities to bundle its forthcoming service Fox One with similar streaming services already on the market, an executive confirmed in a news interview on Friday.
Speaking with the Los Angeles Times, Fox’s CEO of Direct-to-Consumer Pete Distad confirmed with The Desk reported back in June — that Fox One won’t venture into the streaming space on its own, but will tap into the company’s long-standing strategy of harnessing the power of TV bundles to drive incremental reach and generate more revenue.
Fox One is launching on August 21 at a price of $20 per month. It is the second subscription-based streaming service launched by Fox Corporation in recent years (the first is Fox Nation, which is operated by its news subsidiary), and the first time Fox has brought its linear channels to its own streaming service without a traditional pay TV contract.
While some viewed Fox as catching up to the rest of the industry, executives say they stand by the cable bundle and don’t want to incentivize current pay TV subscribers to churn out. Instead, Fox One is intended to reach those who have already dropped cable TV and so-called “cord-nevers” who have never paid for a traditional pay TV service.
“There is a growing audience outside of cable,” Distad told the Times. “We need to give those cord-cutters and cord-nevers access to our content.”
Streaming bundles are a relatively new occurrence, but they’re already proving their worth, with industry surveys revealing consumers tend to stick around with subscription-based streaming services when they can package them together at a lower monthly price point.
Fox One has yet to launch, but it has already formed one such bundle: In two months, Fox will introduce a service tier that unlocks access to ESPN Unlimited for $40 per month. Like Fox, ESPN’s streaming plan launches on August 21 and will be the first time that the cable multiplex is available beyond the traditional pay TV bundle.
In June, The Desk reported Fox executives were weighing other bundles, including a tie-up that packages Fox’s linear TV channels with Hulu and Disney Plus, and a similar bundle that includes access to Warner Bros Discovery’s (WBD) HBO Max (then called Max). Fox, ESPN’s parent company Disney and WBD previously worked together on a joint venture called Venu Sports, which was quickly sued out of existence; Disney has long bundled its own streaming services together, and offers a streaming plan that includes Max.
On Friday, a high-level source at Fox confirmed the company is still working with Disney and Fox on initiatives that would grant greater access to Fox One with other services, including Disney Plus, Hulu and HBO Max. The source also said Fox is interested in similar streaming bundles with “other broadcasters,” including Comcast’s NBC Universal and Paramount’s CBS, which operate sports-inclusive streaming platforms Peacock and Paramount Plus. The Desk was unable to confirm whether Fox has already held discussions with those media companies or to what extent.
While some of its peers have reframed their operations as “streaming-first” enterprises, Fox executives are still committed to squeezing as much out of cable and satellite platforms, which generated $7.66 billion in affiliate fees during its most-recent fiscal quarter. Affiliate fees comprised more than 46 percent of Fox’s overall revenue, which clocked in at $17.6 billion, according to an analysis by The Desk.
Fox doesn’t want to upset that model or displace that revenue any sooner than it has to. At the same time, Distad and other executives know it is just a matter of time before the company is forced to offer its broadcast and cable channels through a standalone streaming package if it wants to expand the reach of its linear TV programming.
The $20 per month price that Fox One commands is enough to spur interest from former cable TV subscribers and those who have never paid for TV in the first place, and the offering of a Fox-ESPN pairing at $40 per month sweetens the deal for those who already watch National Football League (NFL) games through Peacock and Paramount Plus.
As time goes on, the FOX-ESPN pairing — and others that launch in the coming months — could eventually convince sports fans to take on cable once again, especially as some streaming cable alternatives offer other incentives like access to network-owned streaming services.
DirecTV’s MySports package is one such example: Priced at $70 per month, it costs more than the forthcoming Fox-ESPN streaming bundle, but it also includes live channels from CBS and NBC, along with network-owned apps like ESPN Plus (which costs $12 per month on its own). DirecTV will also offer access to Fox One and ESPN Unlimited through the MySprots bundle when those plans launch later this month, and is likely to include access to sports programming from Peacock in the near future.
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