Venu Sports, the upcoming sports streaming partnership among Disney's ESPN (DIS), Warner Bros. Discovery (WBD), and Fox (FOXA), recently announced its price point of $42.99 a month.
Wall Street analysts have debated whether consumers would fork over a relatively high monthly fee for another standalone service. Fox CEO Lachlan Murdoch said Tuesday the price point is exactly where the company wants it to be.
"We think that really hits the right mark and the target for where we want to be as a business, but also as a consumer proposition," he said during the company's fiscal fourth quarter earnings call.
That monthly price point is on the low end of what Wall Street had been expecting. Morgan Stanley had pointed to potential pricing between $40 and $50 a month.
The three companies first announced the joint venture (JV) in February and teased a debut sometime this fall. The service will bring together their respective slates of sports rights and comes as media companies face pressure from investors to scale their streaming services and achieve profitability.
On Tuesday, Murdoch reiterated previous guidance, saying he expects subscribers to hit around 5 million by 2029 and that the opportunity lies in capturing the "cord cutters" and the "cord nevers."
"All of the partners in Venu feel very strongly that we can target our marketing and our subscriber acquisition to sports fans that are not currently in the cable television bundle," he said. "That's important to us and that really is what leads us to a subscriber level in the single-digit millions."
In terms of financials, Fox CFO Steve Tomsic said the business will take "some time" before its cash flows hit break even but that the benefit will come through in revenue from affiliate fees, or the fees pay-TV providers pay to network owners to carry their channels, as Fox will serve as "a key supplier to the JV."
"On a net-net basis, it should be accretive to us on a pretty quick basis," he said.
Fox reported fourth quarter affiliate revenue that came in above consensus estimates and grew 5% year over year, with 2% growth in cable and 9% growth in TV. The company said it expects "to modestly grow" its affiliate fees in 2025 despite declining subscribers.
A few risks have circled the sports platform ahead of its launch.
One includes possible antitrust regulation after sports streamer FuboTV (FUBO) filed a lawsuit against the media giants behind the JV, citing "the extreme suppression of competition in the US sports-focused streaming market."
The companies have specifically warned about antitrust hurdles, saying in a prior news release, "The formation and launch of the new service is subject to regulatory approval and the finalization of definitive agreements amongst the parties."
Another overhang includes the loss of NBA rights for Warner Bros. Discovery, which has since sued the league over its "unjustified rejection" of WBD's matching rights proposal.
Last month, the NBA officially approved a media rights package that excluded WBD, one of the league's current partners, in favor of two newcomers: tech giant Amazon (AMZN) and Comcast's NBCUniversal (CMCSA). It was able to strike a new agreement with its other current media partner, Disney.
Wall Street analysts have warned that the loss of the rights could impact the viability of the soon-to-launch platform.
"Without NBA rights, WBD will become a weak third leg on the sports JV tricycle, and it won’t have the leverage to sustain or grow its retransmission fees," eMarketer senior analyst Ross Benes previously told Yahoo Finance.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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