Following the conclusion of the hearing in a lawsuit brought forth by FuboTV against The Walt Disney Company, FOX Corporation and Warner Bros. Discovery’s upcoming launch of Venu Sports, a direct-to-consumer joint streaming venture, entities involved in the case have filed post-hearing briefs.
U.S. District Judge Margaret M. Garnett is in the midst of considering a preliminary injunction to block the launch of Venu Sports, which is reportedly slated to be available on Friday, Aug. 23 based on information divulged by a lawyer for Fubo, for a price point of $42.99 per month. The judge stated that she would be “mindful of the calendar” in court proceedings on Monday, understanding that the parties involved need certainty in this case, according to Daniel Kaplan of Front Office Sports.
Warner Bros. Discovery counsel stated that should Garnett grant a preliminary injunction, it would mean the termination of the joint venture. Conversely, a lawyer for Fubo warned that if the company does not receive this relief, it will lead to the platform running out of cash by the first quarter of next year, resulting in insolvency. FuboTV had filed the lawsuit in February alleging that the entities involved in the joint streaming venture had tried to block the sports streaming business in a campaign that spanned several years. Streaming accounted for 40.3% of total day television viewership among Persons 2+ in June amid a declining pay TV penetration rate.
If Garnett grants a preliminary injunction, there exists a possibility of The Walt Disney Company, FOX Corporation and Warner Bros. Discovery potentially seeking emergency relief. U.S. Sens. Elizabeth Warren and Bernie Sanders, along with Rep. Joaquin Castro, sent a letter to the U.S. Department of Justice to compel an investigation into Venu Sports for potentially violating antitrust and communication laws.
Within its brief, Fubo argues that the “collective action” of the three companies combines their 60-80% share of U.S. live sports streaming rights and restricts overall competition within the marketplace. Moreover, it states that it has not been offered a chance to provide a sports bundle akin to Venu Sports and that the defendants are citing previous rulings that are inapplicable.
Jimmy Pitaro, chairman of ESPN, testified last week that Venu Sports does not aim to cannibalize pay television distributors because the company earns more from subscribers through cable and virtual disruption. Upon a lawyer from Fubo highlighting internal ESPN research projecting two-thirds of 5 million purported Venu subscribers to emanate from pay television by 2029, Pitaro acknowledged the metric and reiterated that the service hopes not to cause the aforementioned disruption. Nonetheless, ESPN will launch its Flagship direct-to-consumer streaming service next year, and Warner Bros. Discovery currently renders its sports content available on Max.
Within its post-trial brief, the defendants have stated that Fubo’s case comes without merit since they are “entitled to license their networks to anyone on any terms–or no terms at all.” Operating in a highly competitive marketplace, the defendants view Venu Sports as “additive” and would make it easier for consumers to create their own bundles. Garnett is expected to make a ruling later this week or next week on the case, according to Michael McCann of Sportico. The decision could have implications on future joint streaming ventures within the space as companies look to recoup diminished affiliate revenue, viewership and advertising.
FuboTV recently divulged that its service has 1.45 million paid subscribers and generated $382.7 million in total revenue, both of which represent a more than 20% year-over-year rise. Average revenue per user increased 5% to $85.69 concurrent with a 14% year-over-year augmentation in advertising sales revenue. Data from Nielsen Media Research exhibits that ESPN is currently in less than 68 million homes, while FS1 reaches 67.9 million homes and FS2 has 49 million homes. Additionally, TNT and TBS are in approximately 66 million homes with Warner Bros. Discovery scheduled to no longer broadcast NBA games after next season. The company recently sued the NBA, averring that its matching rights provision was rejected in an illegitimate manner.
