Max’s B/R Sports Add-On Represents the ‘Substantive’ Digital Strategy Leagues are Seeking

Max’s B/R Sports Add-On Represents the ‘Substantive’ Digital Strategy Leagues are Seeking

Warner Bros. Discovery (NASDAQ: WBD) has made all the live sports programming it airs across linear channels –300 games per year– available to Max customers via a new Bleacher Report branded add-on. B/R Sports on Max launched late last week (Oct. 5).

WBD is looking to make its Max offering stickier, and capture a percentage of the ~30 million broadband homes outside the Pay TV and broadcast universe, by flanking its entertainment offering with tier one sports (and news) programming.

“We want to attract incremental users,” Luis Silberwasser (chairman and CEO, Warner Bros. Discovery Sports) said. “We’re [also] trying to attract younger viewers.”

The company is trying to best position itself for pending/upcoming sports rights negotiations too.

“Whether it’s the NBA right now or [another property] in the future, it was very important for us as a company, and for the leagues, that we develop and roll out a compelling strategy on the digital side,” Silberwasser said.

Total Pay TV penetration has fallen to its lowest levels since ’92 (58.5%).

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WBD set out to develop a sports content distribution strategy that would serve fans inside and out of the cable bundle.

“We very much believe in a future with a hybrid distribution environment,” Silberwasser said. “Linear will continue to reach a significant number of U.S. homes and play a large role, and then there are going to be a large number of people who just want to watch content via streaming products.”

Naturally, some will have both.

WBD wants to capture as many cable and streaming customers, in aggregate, as possible.

Sport helps to keep fans inside the Pay TV bundle and mirroring the linear offering on a less expensive streaming service could, at least in theory, spur further attrition (penetration was at 90% in ’10).

But Silberwasser “believes, and [WBD] research proves out, that these are [distinct] consumers,” he said. “The people on streaming are primarily different from the people living in the traditional [Pay TV] environment. [B/R Sports is] designed for people who are outside of the cable bundle.”

The company does not see the absence of a cable subscription as indicative of a lack of sports fandom, particularly amongst younger demos. So, they view it as logical to give those individuals the chance to add a robust sports offering.

WBD’s strategy was developed around three core tenets: uniformity, value, and brand alignment.

“There’s a little bit of friction in terms of what’s available [across] digital and streaming,” Silberwasser said. “Sometimes the game you want to watch is on linear. Maybe next week it is only on streaming. It’s hard to keep track.”

WBD’s simulcast strategy eliminates that confusion.

“Everything that we have on our linear channels, that’s the same thing you’re going to [get] on our [Max] streaming platform,” Silberwasser said.

The media company desires to give consumers the ability to select the distribution channel of their choice based on consumption habits, not the content exclusive to it.

Of course, to take that approach and protect its linear partners, WBD had to assign a significant price to the add-on service.

“These are premium sports [rights] that we have,” Silberwasser said. “After a period of time, where people will be able to enjoy it and sample it,” they will have to pay to continue receiving access to the content.

Come February 29, 2024, just prior to the start of March Madness, B/R Sports will cost Max subscribers an additional $9.99/month.

Silberwasser pushed for the company’s sports add-on to be branded as a Bleacher Report product.

“There’s a purpose for that,” he said. “It provides an incredible signal to a young sports fan that you’re going to get all of our premium live games [and also] all the other commentary, conversation, highlights, and short form content that Bleacher and House of Highlights are well-known for.”

B/R Sports will include sports programming from HBO too as it seeks to create a ‘holistic’ consumer offering around the live rights.

Of course, B/R may have been the only option–at least if WBD was going to include NBA games in its digital package.

“In the NBA contract, I believe there is wording in there that Turner Sports can stream to consumers outside of TNT as long as the platform [is] branded as Bleacher Report,” former Turner president David Levy (he’s currently co-CEO and founder of HS&E) said.

Remember, that pact was signed six years ago, long before the concept for Max was born. ESPN had negotiated the right to put some NBA games on a future sports streaming service, and Levy, foreseeing the desire to do the same, negotiated to include the only digital sports brand in the Turner portfolio in the deal.

“We were building B/R Live back then, it made sense,” he said.

That term could be negotiated out in the upcoming rights negotiations. But it doesn’t sound as if change is imminent.

“We like [the brand] a lot,” Silberwasser said. “And [we] want to begin our efforts leveraging the power of the B/R brand and its content. If we want to reach a younger audience, there is no better digital brand in sports [than] Bleacher Report.”

It’s not clear how many subscribers will add B/R Sports in Q4, even if it is free. Baseball playoffs aside, there isn’t a ton of must-have sports programming on TBS and TNT.

“The biggest risk we see is that the streaming sports offering sees limited consumer adoption,” Michael Morris (senior managing director, Guggenheim Partners) said. “This would indicate that the vast majority of sports fans already have their needs met [likely through current bundle channel offerings].”

But that could change come the end of Q1 into Q2 when March Madness tips off. Fans of pro sports outside the bundle may also be tempted to sign-up once the NBA and NHL Playoffs begin.

“Based on linear viewing trends, we expect NCAA Basketball and NBA to be the largest engagement drivers for the Bleacher Report streaming sports offering. As such, following the initial free trial period for the service we anticipate some subscription seasonality around content timing,” Morris said.

It should be noted that March Madness Live, the company’s existing NCAA Tournament streaming platform (which requires cable authentication after a sample period), will continue operating as is.

Of course, the natural follow-up question is how long will B/R Sports subscribers stick around?

“We’re expecting that people will sign-up and stay with us primarily because we offer some of the biggest sports, like NBA, NHL, MLB, NCAA and U.S. Soccer, for the majority of the calendar year, but also because we complement this with fantastic sports-adjacent content from B/R, House of Highlights, and HBO,” Silberwasser said.

Rights owners are likely to view WBD’s move to add B/R Sports favorably.

“They like the approach we’re taking because it allows us to offer the games to everybody and expand our reach,” Silberwasser said.

The increased flexibility should ultimately net them more dollars too.

“They’ll say [the network] needs to pay more because it is giving it the option to use the content across the portfolio,” Levy said.

WBD Sports may not mind paying the premium, if the strategy helps the company to successfully navigate the evolving media landscape.

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