A federal judge has temporarily banned a joint venture between two media giants that want to combine their sports licensing rights and create a new streaming service. Rival sports streamer Fubo had objected to the move.

U.S. District Judge Margaret Garnett on Friday ruled against The Walt Disney Co., Fox Corp. and Warner Bros. Discovery, blocking Venu from moving forward with its planned release later this year, concluding that Fubo is likely to prevail on its claim that the partnership will “substantially lessen competition and restrain trade.”

If the platform is launched, the court said, there would likely be a “rapid exodus” of Fubo subscribers, leading to the company’s bankruptcy. Venu will be the “only option in the market for those television consumers who want to spend their money on multiple live sports channels they enjoy watching, but not on redundant entertainment channels they don’t want to watch,” Garnett wrote.

In a statement, Disney, Fox and Warners said they would appeal the order. “We believe Fubo’s arguments are incorrect as to the facts and law and that Fubo has failed to demonstrate that it is legally entitled to an injunction,” it continued. “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 CEO David Gandler praised the ruling as a victory for consumers. “The proposed joint venture is just the latest example of anti-competitive practices that The Walt Disney Company, FOX Corp. and Warner Bros. Discovery have consistently used for many years,” he said in a statement. “We believe these practices monopolize the market, stifle competition and deprive consumers of a choice they deserve.”

The streaming package is set to launch in the fall for $42.99 per month and will be offered as a bundle with Max, ESPN+ and Hulu. Subscribers locked into that price for a year will have access to a range of live and linear channels, including ESPN, Fox, ABC, TNT and TBS, as well as ESPN+. The three networks own the rights to the NFL, NBA, MLB and NHL, as well as college sports and professional tennis. Together, they control over half of the nationwide television rights to professional and college sports.

The service is intended to compete with YouTubeTV, which costs around $70 a month but also offers access to sports broadcasts from NBC and CBS, as well as Fubo, which sued the two media giants in February over the joint venture.

Fubo’s case revolved around arguments that Disney, Fox and Warners exploit their control over must-see sports to force rivals to carry dozens of expensive, unpopular channels as a condition of licensing major sports channels. These anti-competitive bundling requirements, it claims, result in higher costs for consumers because they are forced to pay for content they don’t watch.

But with Venu, the media giants have “given themselves – and themselves alone – the right to offer a premium sports package without the dozens of unwanted channels that drive up costs and turn off consumers,” Fubo said. The platform will include just 15 channels, all showing popular live sports, according to court documents. Fubo claimed that Venu will dominate the market for a sports package offering because Disney, Fox and Warners prevent other distributors from offering a competing product.

According to the 69-page order, the companies involved in Venu exercise “near-monopolistic control” over the competitiveness of a rival live sports streaming service. Shortly after announcing the platform, they specifically agreed to “refrain” from supporting an identical platform, the court said. This gives them a multi-year startup perspective to potentially stifle competition and raise prices for consumers and other distribution partners.

The court based its conclusion on the fact that the companies had granted the joint venture an exclusive license for unbundled sports programming for the first time.

“The bundling was imposed uniformly and systematically on all distributors in the live pay-TV industry, with the exception of the joint venture, thereby preventing any other distributor from offering a multi-channel, sports-focused streaming service,” the order said.

During a hearing on whether a preliminary injunction should be issued, Gandler said, “We asked for the stripped-down package provided to Venu and were told that was not the case.”

Providers would jump at the opportunity to offer only sports content and have long been trying to offer such a package to their customers, Garnett said. She pointed to Fubo, which offers a stripped-down sports package in Canada.

To obtain an injunction, Fubo had to prove allegations of what it called “irreparable harm” in the absence of a court order blocking the platform’s release. The company said it would be forced out of the market, giving Venu’s owners free rein to raise prices. Alternatively, Fubo sought a court injunction to quash the implementation of certain contract terms, such as the requirement to carry unwanted channels, on the grounds that they constituted illegal tying agreements under Section 1 of the Sherman Act, an antitrust law that prohibits restraints of trade.

If an appeal of the temporary suspension of Venus’s release is not granted, the case, unless settled, will ultimately go to a jury.

Disney, Fox and Warners’ defense was based on the argument that Fubo was trying to protect itself from competition from other competitors by releasing an innovative new product.

“Sports fans would be deprived of a new, less expensive way to watch games; innovation would be prevented and production would be stifled,” Warners said in a court document. “Competition would be hampered.”

The companies also stressed that Fubo is simply a “weak competitor” that adds little value to the TV ecosystem. Unlike them, Disney, Fox and Warners said, Fubo does not risk billions of dollars to acquire unique content and then billions more to turn that content into desirable programming. The company “remains an undercapitalized startup with minimal differentiation that acts as a middleman for content that other companies enable,” they said.

The media giants stressed that each member of the joint venture, which is limited to nine years, will continue to negotiate individually with the leagues on the acquisition of sports rights and will have no influence on how they license their content to third parties, as a firewall prevents the sharing of confidential information.

In a statement, DirecTV said: “We are pleased with the court’s decision and believe it adequately addresses the potential harm that would result from allowing major programming providers to license their content to an affiliated distributor on more favorable terms than if they license their content to third parties.”

Venu will not include CBS Sports or NBC Sports, meaning several NFL and college games will not be available on the service. And with the NBA inking new deals with NBC and Amazon, it is expected to lose about half of its professional basketball games.

In 2022, Disney was sued by YouTube TV subscribers, who alleged antitrust violations and cited business relationships that give the company the de facto ability to set “a price floor” for the market and drive up prices across the industry by raising the prices of its own offerings.