A top Nexstar Media Group executive told analysts concerned about the impact the sports streaming joint venture announced by The Walt Disney Co., Fox and Warner Bros. Discovery, would have on broadcast stations that the station group wasn’t sure the venture would launch.
News of the venture sent TV station stocks lower earlier this month amid fear it would further cut into pay TV subscribers and reduce station retransmission fees, which are figured on a per-subscriber basis. That put it on the top of the agenda as companies including the E.W. Scripps Co., and Gray Television reported earnings
On Nexstar’s fourth-quarter earnings call with analysts Wednesday, president and chief operating officer Mike Biard said there has been a lot of misunderstanding about the venture.
“To date, we have more questions than answers about the proposed product, including assurance that it will actually launch,” Biard said. “We know launching a new streaming startup will be challenging, including potential regulatory hurdles, lawsuits and other complicating factors surrounding the JV. So we'll have to see how this all plays out.”
Disney, Fox and Warner Bros. Discovery have been sued by Fubo, another streamer focusing on sports. The Department of Justice is also reportedly examining the venture.
Biard, a former Fox distribution executive, said that the market overreacted to the initial announcement of the venture because it misinterpreted how it would operate.
“We have confirmation that it will function in the same manner as other vMVPDs that distribute our Fox and ABC affiliated stations,” he said. “To be clear, Nexstar will have the option of opting in to secure carriage and compensation for our ABC and Fox affiliated stations. As such this would be an additive incremental revenue stream for Nexstar.”
The three companies forming the venture have an interested in preserving linear networks, he added.
”We believe the three JV partners understand the value of the linear ecosystem as pay TV revenues remain vital to each of them,“ Biard said. “They’ve demonstrated this in their respective approaches to [direct-to-consumer], largely avoiding the strategies of some of their peers that have undermined the value of their own core linear networks. There is no question that the bundled linear video, particularly broadcast continues to be the most effective distribution platform for sports content and the most attractive value proposition to customers for access to the most compelling sports, news and entertainment, all in one place.”
Biard noted that the interest in forming a sports venture validates Nexstar’s strategy of putting more sports on The CW network and its stations.
