Fox (FOXA) is about to enter the competitive streaming marketplace with its own direct-to-consumer service, expected to launch by the end of this year.
Fox CEO Lachlan Murdoch made the announcement during the company's fourth quarter earnings call on Tuesday, saying that while the traditional cable bundle still presents "the most value" for both Fox's customers and its business, "we do want to reach consumers wherever they are."
Analysts have said Fox's assets have been heavily skewed toward the linear pay TV ecosystem at a time when more consumers are cutting the cable cord in favor of less expensive streaming services.
To that point, Murdoch said the new service will target the "cord-cutters" and the "cord-nevers." The company plans to release more details regarding the launch in the coming months.
"We don't want, and we have no intention of turning a traditional distribution customer into our direct-to-consumer customer," the executive added. "And so our subscriber expectations will be modest and we're going to price the service accordingly."
Traditional legacy players have tried to adapt to the industry's streaming transition. Along with Fox, CNN parent company Warner Bros. Discovery (WBD) recently unveiled plans to invest $70 million into a "digital revamp" of its network, which also includes its own direct-to-consumer streaming product.
Fox's management had hinted at plans to explore more streaming options. The new service it just announced comes after the abrupt dismantlement of Venu Sports, a sports streaming service that was supposed to launch from Fox, Warner Bros. Discovery, and Disney's ESPN (DIS).
The three companies first announced the joint venture last year, with an expected price point of $42.99 a month. The service was set to bring together their respective slates of sports rights as media companies attempt to scale their streaming services and achieve profitability.
Ultimately, though, the service was abandoned due to increased regulatory and antitrust concerns.
"Our only disappointment in sports is that we will not be moving forward with [Venu]," Murdoch said on the call. "While the Venu team has done a tremendous amount of truly genius work preparing the digital platform for launch, in the end, the legal distractions around the business became increasingly difficult to bear."
In its fiscal second quarter results, Fox reported revenue, adjusted EBITDA, and adjusted earnings per share all above consensus expectations, driven by heavy election spending and a stacked live sports schedule, sending shares 5% higher in mid-morning trade Tuesday.
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