Fox Corp. is entering the crowded streaming market with a new paid service planned for launch by the end of the year. This move comes despite Fox already operating two streaming platforms: Fox Nation and Tubi. Analysts suggest the new service could be a strategic play to leverage existing cable programming and capitalize on the growing cord-cutting trend. While Fox's entry is late, the company aims to differentiate itself by focusing on sports content, particularly college football and NFL games.
Fox is entering the streaming market rather late with a new paid service scheduled to launch before the end of the year. This late entry might not be a disadvantage. The streaming landscape is highly competitive, with numerous contenders vying for subscribers and profitability as they aim to rival Netflix. Fox already has two existing streaming platforms: Fox Nation, a paid service launched in 2018 specializing in right-wing news and documentaries, and Tubi, a free, general-interest streamer.
So, why is Fox launching yet another platform? Essentially, Fox seems to be attempting to maximize the value of its existing cable television programming. During an earnings call on Tuesday, Murdoch, the CEO of Fox, mentioned the upcoming general-interest streamer (which he did not name) would target 'cord-cutters and cord-nevers.' He emphasized the significance of Fox's cable business, stating, 'Our subscriber expectation will be modest, and we're going to price the service accordingly.' Two analysts who spoke to Business Insider suggested that Fox's streaming service could serve as a valuable backup plan in light of the company abandoning Venu, its previous joint venture with Disney and Warner Bros. Discovery, which was focused on sports streaming. '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 is also preparing a slimmed-down cable bundle with Disney's Fubo. A Fox spokesperson confirmed to BI that the standalone streamer was part of the company's initial direct-to-consumer strategy. David Joyce, a senior equity analyst at Seaport Research, acknowledged that Fox's streaming service 'doesn't seem to have an obvious hole in the marketplace that needs to be filled.' However, he characterized it as a 'low-risk' strategy considering the company won't be investing further in sports rights. Sports will be a key differentiator from Fox Nation, although Fox's offering — which encompasses college football, Sunday afternoon NFL games, NASCAR, and other events — is somewhat fragmented, Joyce noted. He added, though, 'there's going to be minimal incremental costs because they already have the rights.' In a research note on Tuesday, MoffettNathanson suggested the streamer could position 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 stated. Fox's stock experienced an upward trend on Tuesday primarily due to better-than-anticipated advertising and affiliate fees, according to Joyce.
STREAMING FOX SPORTS CABLE TV CORD-CUTTERS
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