Sports is must-have content, the key to holding the cable bundle together and drawing subscribers to streaming platforms. Right? That at least is the mainstream view and what is driving steamers like Netflix and Amazon Prime into sports, and is behind the big bucks linear players pay to broadcast sports. Warner Bros. Discovery CEO David Zaslav came out with a different angle this morning on an earnings call, saying renting sports short term versus relying on movies and TV shows is not good business.
“Some regional players are becoming more and more dependent on sports and rental sports,” Zaslav said. “And the ability to really build a long term platform on short term sports rights has not been a good story in the past, and it’s unlikely to be a good story in the future.
“So when I see a real push to pay a lot more for sports to get effective, guaranteed audiences, or an audience that you could really model versus building it on great IP like Batman or the Penguin I think that’s a good thing for us,” he said, referring to some of WBD’s studios movies. “Because that’s where we’re going to, we’ll build, really build the value, and that’s what we build our brand around.”
Now a few observations. Some of this is Monday morning quarterbacking. WBD went all in on trying to retain its NBA rights, which expire now in a few months. So much so that WBD sued the NBA, before the sides settled last November. And it’s not as if WBD has abandoned sports, it has MLB, the French Open, Unrivaled, NASCAR, the NHL, and the NCAA Tournament.
The company is projecting it could reach 150 million subs for its streaming service, Max, by the end of next year. The figure at the end of the fourth quarter stood at 116.9 million, up 6.4 million from the prior quarter.
That growth, at least from what David Zaslav said today, is not going to be on the back of pricey sports rights deals. When asked about bidding on MLB’s Sunday Night Baseball or the UFC, Zaslav did not sound all that enthusiastic.
“The critical element for us as we look at our streaming service is the quality content, the movies, the series,” Zaslav said. “That’s, that’s the leading edge of the value equation. And we own that. So when we launch Harry Potter in a year, a little over a year, we’ll have 10 consecutive years of Harry Potter, and be able to amortize that globally, around the world.”
And in perhaps his strongest comment on sports, Zalsav said, “We don’t need any more sports anywhere in the world in order to support our business, we would buy sports in order to if we think it would enhance our business. And it’s going to get more difficult. You know, some of those prices being paid, and some of the competitors are opting to go to sports instead of doing what we do.”
That seems to be a knock against platforms like Peacock, which is investing heavily in sports.
David Zaslav reiterated his belief that consolidation will occur among the major streaming platforms, either through bundling or outright acquisition. And he called for a more orderly ecosystem so as not to confuse viewers over where to find content.
“Fundamentally, when you look at the marketplace, we really believe that the global players will be those that will really prosper in the years ahead, and ultimately the largest sustainable growth media companies, they’ll probably be four or five and or six, and our job every day is to fight to get a seat at that table.”
About Daniel Kaplan
Daniel Kaplan has been covering the business of sports for more than two decades. A proud founding reporter of SportsBusiness Journal, he spent the last four years at The Athletic.