Sportsball+
Thoughts on "Spulu"
Some observations on the WBD/Disney/Fox “Spulu” (sports Hulu) app -
This hastens the demise of the cable bundle, where the core demo is mostly boomers and sports fans at this point. It’s all going down eventually, but for now it’s still a profitable business and this seems…short-sighted? How does this not cannibalize linear (sub fees, ads) revenue? I assume someone smarter than me did the math and it checks out, at least in the short-term. I just can’t see how this ends in a long-term win for all the publishers involved.
If Spulu is too successful and linear subs fall off a cliff, WBD, Fox, and Disney are in trouble. If no one signs up because it ends up being too expensive, they are also in trouble. Evan Shapiro called it a “hail mary” – they band together, make an offensive play and maybe they aren’t bidding each other up for rights, but any of the leagues could take a walk over to Apple, Amazon, YouTube, or even Netflix. So Spulu needs enough subs to land in some mythical Goldilocks zone where they aren’t accelerating cord cutting to the point it hurts their bottom line too much on the linear side but getting enough “cord nevers” to justify the existence of the JV. Good luck with that. I think I would struggle with a project that can’t be too successful or else it would harm the company, but to be fair, the pricing (a good discussion here) will likely have a bigger impact on that more than anything else.
Distributors can’t possibly be pleased that one of the last things keeping people that don’t qualify for Medicare on bundles is losing some of its value proposition. I wouldn’t want to be on the publisher side the next time those distribution deals come up.
Pissing off the NFL seems like a bad idea. Publishers need the NFL way more than the NFL needs them. Goodell will do whatever it takes to protect the shield and its revenue, and the lawyers are getting involved, which is not great. John Cassillo explains why the NFL is so salty here. They could probably kill the entire JV by threating to take a walk over to our big tech overlords, right?
But assuming this app launches, does it make sense? As a diehard1 football fan, you would need Spulu (rumored to be $40-50), an antenna, and NFL+ Premium at $15 per month. So that’s $55-65, and another $12 if you add Peacock/Paramount+ instead of the antenna2.
Youtube TV – 72.99 + 10.99 for RedZone, so $84.
So, there’s some savings there, if you don’t care about the linear non-sports content and time shifting3 via DVR. Julia Alexander breaks down the economics for the rest of the leagues here, and with an antenna and Spulu alone you’re in pretty good shape for NHL, NBA, and MLB—unless you’re dependent on an RSN for your local team.
My hot take: We will never see this app launch.
Matt Stoller, Director of Research at the American Economic Liberties Project and author of the anti-monopoly Substack BIG, stated via Twitter that the joint venture was “pretty much designed to violate the antitrust laws”. According to Bloomberg, the DOJ is already scrutinizing it. In our current regulatory environment, I wouldn’t bet the farm against Lina Khan and the DOJ.
Craig Moffett also hopped on CNBC to predict that “at the very least, this would seem to violate the most favored nation clauses that prohibit the programmers from offering better terms and conditions to another distributor, even if that distributor is a JV of the programmers themselves. I would be surprised if there aren’t some lawsuits.” Pluto has already filed suit.
And finally, Matthew Belloni said when the news first broke: “Will it actually launch, or was this just a press release to juice the Disney and Fox earnings calls?” I’m leaning press release.
In sum, the DOJ will be breathing down their necks with antitrust concerns, distributors are furious and will likely sue them, and the NFL is not happy about being commoditized and kept in the dark. On top of that, Spulu can’t be too successful, or else it will kill the cable bundle much faster than anticipated and impact the parent companies negatively. This does not seem like a recipe for success.
The definition of “diehard”:
Prime for TNF, NLFN for the handful of 9:30 am Sunday and random Saturday games, NFL RedZone (RIP Andrew Siciliano RZ), CBS and FOX for the last game in the late window on Sunday when RZ cuts off, NBC for SNF, and ESPN for MNF.
ESPN and the broadcast networks for NCAAF
I’m not seeing any mention of antennas in this discussion, and instead seeing everyone factoring in costs for Paramount+ and Peacock for the broadcast networks that weren’t invited to the party. According to Horowitz in 2021, 40% of TV viewers over 18 have an antenna, with YOY growth at 38%. This translates to roughly 48.4 million households, and the number has almost certainly grown in the intervening 3 years. If you don’t have one, go get one. If for nothing else, it’s great backup when the internet goes out, or DIRECTV and TEGNA (your local NBC affiliate) get into a fight over retransmission fees and you don’t figure it out until 2 minutes before SNF starts, so you run into the basement and tear apart 5 boxes looking for it while your wings are getting cold and your beer is getting warm and you’re MISSING THE GAME. What were we talking about? Oh, right, Spulu.
I routinely time shift, as youth sports typically do not schedule around marquee college football games on Saturdays. You will pry my DVR from my cold, dead hands. I am sticking with a bundle, and get off my lawn.
RJ, great analysis and appreciate you insights.