FuboTV announced its earnings for the second fiscal quarter of the year, divulging that the virtual multichannel video programming distributor (vMVPD) has 1.45 million paid subscribers and generated $382.7 million in total revenue, both up more than 20% year-over-year. The company also revealed that its average revenue per user increased 5% to $85.69, along with a 14% year-over-year increase in advertising sales revenue. FuboTV sued The Walt Disney Company, FOX Corporation and Warner Bros. Discovery and affiliates for engaging in antitrust practices with the formulation of its Venu Sports joint streaming venture set to be released in the fall. The company contends that the joint venture was indicative of anti-competitive practices and posing “significant harm” to Fubo and its consumers. A hearing pursuant to the lawsuit took place on Tuesday in a lower Manhattan federal court where Fubo aims to obtain a preliminary injunction to prevent the joint venture from launching.
Venu Sports recently announced that it would charge users $42.99 per month to use its service, which includes 15 linear networks owned by Disney, FOX and Warner Bros. Discovery. The companies have stated that they view the service as something to accompany the primary television bundle, on which its programming will continue to be licensed. Lachlan Murdoch, chief executive officer of FOX Corporation, has expressed that his management team foresees Venu Sports attracting approximately 5 million subscribers in its first five years of operation. During the company’s quarterly earnings call, FuboTV chief executive officer David Gandler explained the threat that the joint streaming venture has if it launches as planned.
“We continue to fight for competition and better prices in a market in disruption, contrasting with The Walt Disney Company, FOX Corporation and Warner Bros. Discovery,” Gandler said. “Their JV attempts to circumvent the need for regulatory approval, while still giving these partners control of 80% of the premium sports market. The JV claims to solve the issue of bulky cable bundles, but we believe its primary goal is to limit competition, boosting partners’ profits synthetically, and leading to steep price hikes for consumers, similar to those seen with their SVOD services.”
As the pay TV penetration rate continues to diminish, various media companies are looking for new ways to directly reach consumers. ESPN will launch its flagship service next fall that will grant users an option to subscribe directly and engage with the network, which is currently in less than 68 million homes, according to data from Nielsen Media Research. FS1 has diminished to 67.9 million homes, while FS2 is in about 49 million homes. Both TNT and TBS are in approximately 66 million homes with Warner Bros. Discovery no longer broadcasting NBA games after next season.
In its lawsuit, FuboTV argued that the three companies involved in the joint streaming venture have consistently taken part in anticompetitive practices that look to monopolize the market and diminish competition. As a result, the company asserts that the venture would create higher pricing for subscribers and deprive consumers “from deserved choice.” Mark Hansen, lawyer for Fubo, explained in court that the company has looked to provide a sports-only bundle featuring fewer channels at a lower pricepoint; however, programmers have coerced it to carry other networks in order to obtain sports channels. Because of this stipulation, the company avouches that it requires a price increase to cover additional programming costs.
FuboTV averred that it could no longer stay silent on the issue, especially since live sporting events comprised 97 of the 100 most-watched television broadcasts last year, according to data from Nielsen Media Research. The service currently does not carry channels from Warner Bros. Discovery after the two sides were unable to reach terms on a carriage deal ahead of its expiration at the end of April.
“Consumers passionate about sports content, but frustrated with high prices and inflexible bundles, need multiple streaming options with competitive pricing,” Gandler said. “Fubo, like all distributors, have the right to fairly compete in the sports streaming market. A fair market would force the JV partners to compete against each other in the licensing of sports channels to pay-TV platforms, virtual and traditional, as well as with other market participants further downstream in the distribution space. This will foster competition, benefiting consumers with better prices and choices.”
