Venu Sports, the direct-to-consumer streaming service that will combine the resources of ESPN, Fox Sports and TNT Sports, is embroiled in a legal battle that could prevent the service from launching at the scheduled start of the NFL season after a judge temporarily blocked its launch, according to court documents obtained by Fubo.
The U.S. District Court for the Southern District of New York found that Fubo, another online TV provider, had presented sufficient evidence that the joint venture “will at least tend to reduce competition in the live pay-TV market,” the court decision said.
Judge Margaret Garnett noted that Disney, Fox and Warner Bros. Discovery control “at least 60 percent of all nationally broadcast U.S. sports rights” as well as 98 percent of the rights to playoff games in professional baseball, hockey, football and basketball.
“This means that Disney, Fox and WBD are each individually significant players in the licensing of live sports, otherwise competing with each other to both secure the rights to broadcast sports and attract viewers to their live sports programming. But together they are dominant,” Garnett said. “…Because of their market power and the undisputed value of their products, the (joint venture) defendants have significant leverage in negotiations with the distributors. Their sports content enables them not only to command high licensing fees, but also to obtain favorable distribution and contract terms for their non-sports networks.”
Warner Bros. Discovery, Fox and ESPN expressed their disagreement with the ruling in a statement Friday and said they intend to appeal.
“We believe that Fubo’s arguments are incorrect as to the facts and the law, and that Fubo has failed to demonstrate that it is legally entitled to an injunction. Venu Sports is a pro-competitive option that aims to increase consumer choice by reaching a segment of viewers currently underserved by existing subscription options.”
Fubo’s co-founder and CEO David Gandler called the ruling “a victory not only for Fubo, but also for consumers.”
“The proposed joint venture is just the latest example of the anti-competitive practices that The Walt Disney Company, FOX Corp. and Warner Bros. Discovery have consistently engaged in for many years. We believe these practices monopolize the market, stifle competition and deprive consumers of a choice they deserve,” Gandler said in a statement on Friday.
The ruling comes just over a week after Senators Elizabeth Warren and Bernie Sanders and Representative Joaquin Castro sent a letter to the Justice Department urging it to investigate the case and potentially block Disney, Fox and Warner Bros. from forming the joint venture. In the letter, the three Democrats called on the Justice Department to investigate Venu Sports “and take action against it if it violates any antitrust or telecommunications laws or regulations.” The athlete previously reported.
Venu Sports should launch soon at a price of $42.99 per month. Subscribers will not need a cable subscription and will be able to access all programming and games from the three networks and their affiliates (such as ABC and Fox), as well as ESPN+, the network’s additional direct-to-consumer service that offers niche sports.
What should we make of the verdict?
Venu Sports’ impact on sports viewing has been slightly overestimated from the start. However, the fact that a federal judge blocked ESPN, Fox and TNT Sports from joining forces in a joint venture offering sports fans a stripped-down package is a setback, as the trio had planned to launch as early as football season. Instead, it’s a win for the legacy package, as they plan to offer smaller packages like this in the future.
Whether or not that ruling is overturned on appeal, Venu, at least in this version, was always going to be an incremental step because it doesn’t solve the problem of finding all the major sports in one place. Fox CEO Lachlan Murdoch has said the goal for Venu Sports is to have 5 million subscribers in five years. That’s potentially helpful for those companies, but it’s not a groundbreaking step. It doesn’t solve all the sports viewer problems, which — regardless of how the courts end — is the problem.
As we said in February when the joint venture was first announced, TV executives might one day come up with something that puts all sports in one place – they might call it, I don’t know, cable. – Andrew Marchand, senior sports media columnist
Required reading
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