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And now, on to the main event…

Surely, something has to change at Peacock, the last of the major streaming services to still be unprofitable. Yes, Paramount+ just barely crossed that milestone, and will probably start losing money again once that $7.7 billion UFC deal hits the P&L. But at least David Ellison appears to have a vision for where the newly merged Paramount-Skydance Corporation is headed in streaming. Over at Disney, ESPN chief Jimmy Pitaro is striking deals with the NFL, and C.E.O. Bob Iger is folding Hulu into a Disney+ super app. Warner Bros. Discovery C.E.O. David Zaslav, who’s in the midst of spatchcocking his company, appears open to M&A.

Comcast boss Brian Roberts is also charting a new course by spinning out the company’s linear assets (minus NBC and Bravo) as Versant. And yes, Peacock is seeing some momentum, doubling its share of subscriber additions between May and June, per Antenna. There’s no question as to why: A big part of those June additions likely came from one show. Love Island is a massive hit—it was Nielsen’s most streamed show last week, and is Peacock’s most watched original title. Not to mention there are positive signs on the advertising front, with Peacock driving more than a third of NBCUniversal’s ad volume this year, according to Roberts, up 20 percent from the year before.

And yet, it’s not clear what’s next for Peacock after the Versant separation. Nothing—not the Olympics, not the NFL, not even Love Island—has been able to increase Peacock’s share of total TV viewing time beyond 2 percent in the U.S., which is well behind Disney’s combined near 5 percent, Netflix’s 8.3 percent, and YouTube’s 12.8 percent, according to Nielsen. Earlier this year, NBCU signed a $2.45 billion-a-year deal with the NBA to broadcast games for the next 11 years, after data suggested that people who signed up for Peacock to watch January’s NFL playoff game stuck around to watch other content afterward. But it’s a big and otherwise unproven bet. Peacock’s churn rate currently runs 2 percentage points above the national average.

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If there’s a path to profitability for Peacock, it probably starts with extracting more revenue from its existing sports-watching audience (and finding more Love Island–adjacent hits, without overspending). Last month, NBCU announced a price hike of $36 a year for both the ad-tier Premium (now $11 a month) and the limited-ads Premium Plus (now $17 a month), which is more expensive than Paramount+, comparable to HBO Max, and still cheaper than bundles like the ad-free version of Disney+ and Hulu ($20 a month). Arguably, this is an overdue correction for a product that will soon have the NFL, Premier League soccer, college football, and those newly acquired NBA games starting this fall. Indeed, Peacock has long been underpriced relative to what it delivers.

But the real test will arrive in Q4, when consumers finally weigh the streamer’s new pricing against its expanded portfolio. If Roberts whiffs with his huge, decade-long, multibillion-dollar NBA deal, Peacock could find itself in the uncomfortable position of overpaying for temporary sports rights that don’t generate long-term brand value. Is there still room to increase Peacock’s 41 million subscriber base—which has grown steadily during the last few years, thanks to the NFL, but has slowed recently—with the addition of the NBA? Or will price-sensitive consumers, tempted by the new ESPN/Fox bundle (available in October for $40 a month), decide their money is better spent elsewhere?

Sports fans are less price-sensitive than other streaming subscribers. This cohort spends an average of about $111 a month on streaming services, according to research firm Parks Associates, nearly twice what non-sports fans spend. Around 40 percent of identified sports fans are also streaming-only customers.

No matter where you look, the data underscores why Comcast has invested in this segment and in the NBA. A Kagan report found that the NBA was second only to the NFL, excluding the Olympics, among sports that most interest streaming-first fans. Meanwhile, according to a Hub Entertainment Research survey from last August, Peacock ranked second among streaming platforms as the best place to watch games, just behind Amazon Prime Video.

Still, Peacock will need to thoughtfully manage consumer expectations if it’s going to keep charging more. The streamer’s recent price increases were substantial, nearly 40 percent in the case of the Premium tier. At the same time, NBCU is moving some library content off of Peacock’s free and Select tiers, incentivizing users to upgrade for full access to films and Peacock originals. Much of the sought-after sports content, Peacock’s big draw, is now exclusive to Premium tiers. NBCU executives are betting the approach will boost revenue overall, as the NBA season flows into a winter lineup that will include the Super Bowl, the Winter Olympics, and the World Cup. Even if Peacock continues to slowly ratchet up prices to, say, $20 a month, the Premium Plus offering would still be more attractive than the forthcoming stand-alone ESPN app ($30 a month) and on par with Fox One ($20). At least, that’s the idea.

Of course, for Peacock to go toe-to-toe with other streamers, it needs a more diversified strategy than just sports rights and price hikes. Even with crucial assets like the NFL and a potential growth gold mine in Premier League soccer rights, Peacock isn’t engaging audiences at the frequency required to draw in advertisers who want to appear against non-sports content. In June, Peacock secured a 1.5 percent share of TV time in the U.S., behind every other major streamer except HBO Max. Netflix, Disney+, and Hulu have far less “must-watch” big-ticket programming, but nevertheless manage to surpass Peacock each month.

To take more market share, Peacock needs to build the right complementary programming. Over at Paramount, for instance, Ellison seems to have a clear psychographic profile of the audience he’s building, combining UFC fans with Taylor Sheridan devotees, South Park bros, CBS crime procedural addicts, etcetera. Sure, Peacock has its own investment thesis: In short, to offer a little bit of something for everyone—football and basketball for Dad, Bravo for Mom, and Minions for the kids. The problem isn’t the diversity of content; it’s the ability to break through when it’s getting outspent. Netflix spends billions more than NBCU on content every quarter, and that means there is literally something for everyone, even if it’s not always as good as the premium I.P. flowing into Peacock.

NBCU ought to be thinking more strategically about bundling, too. As I wrote last week, the recent Disney+ and HBO Max bundle drove 2.2 million new subscribers by the end of 2024, per Antenna, with high retention. That’s why Disney and Fox are partnering, and why Paramount+ and HBO Max are considering similar moves. Certainly, Peacock’s sports rights would make it an attractive partner, especially for HBO Max as it pulls back on growth tactics and focuses on its premium I.P.

Indeed, an HBO Max/Peacock bundle would bring sports to HBO Max, and more premium entertainment to Peacock. Not to mention that such a bundle offers the potential for extraordinary rewards with no major investment on Roberts’ or Zaslav’s part. And it might allow them to really dig into each other’s businesses—the first step, perhaps, to a more lasting partnership.

A partnership could also, of course, serve as a prelude to a merger, whether a full acquisition or joint venture. One insider recently told my colleague Kim Masters that Roberts might want Warner Bros. Discovery properties to prop up the Universal theme parks business, which is a growing segment of Comcast’s revenue. But if the rumors are true that Ellison has his eyes on Warner Bros., time may be running out for Roberts to make a move. He needs to strike a deal that works for him, rather than just whatever becomes unavoidable down the road.

Thanks, Julia. See everyone tomorrow.

Matt

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