Nomura Equity Research’s Michael Nathanson does a nice job this morning of laying out the likely business arrangements for News Corp‘s still unannounced but widely expected plan to convert its Speed channel into a national network to be called Fox Sports 1, with Fuel to be rebranded as Fox Sports 2. Rupert Murdoch is betting on “what the company believes will be increasing value of live sports over the next couple of decades,” Nathanson says. Advertisers spent a record $13.3B on broadcast and cable sports last year, confident that viewers would watch them live — instead of recording the shows to zip past the commercials. News Corp’s sports initiatives also seem to make sense according to Nathanson’s calculations of pay TV fees: Speed and Fuel together collect about $300M a year. Under what the analyst calls his “blue sky scenario,” the company could see nearly $1.5B in additional revenue from cable and satellite companies (and, presumably, their customers) as Fox hikes their prices once the channels are rebranded.

But Disney execs don’t have to sweat: Even under the best of circumstances “News Corp. would barely be able to afford ESPN’s current NFL package,” Nathanson says. What’s more, “ESPN is well protected for many years thanks to both its long-term affiliate fee deals as well as its sports rights locked up well into the next decade.” What games could the Fox networks offer? Probably about 40 Major League Baseball games per year plus “college sports, NASCAR, [Fox’s] current soccer rights (English Premier League and UEFA Champions League) and future FIFA World Cup rights, and UFC.” ESPN and Turner’s eight-year NBA package expires at the end of the 2015/2016 season, and Fox could bid aggressively. The NFL also might want to play ball with Fox, although Nathanson says that the league could just hang on to its TV rights considering the success that the NFL Network has had with its Thursday night games.

The bottom line: Although Fox Sports 1 could become a meaningful rival to ESPN in the next 10 years if it snags NBA or NFL rights, “given ESPN’s affiliate fee war chest, we believe Disney will be able to control its own destiny and renew whatever deals it sees the best returns going forward.”