Venu Sports, the joint streaming venture from The Walt Disney Company, FOX Corporation and Warner Bros. Discovery, is facing an uncertain future following a ruling in an antitrust lawsuit. U.S. District Judge Margaret M. Garnett has granted a motion filed by FuboTV for a preliminary injunction that will impede the media conglomerates from moving forward with the streaming platform, which was supposed to launch by the fall and cost $42.99 per month. The defendants have the ability to appeal the ruling to the U.S. Court of Appeals for the Second Circuit. A full trial has yet to occur, but the Court heard five complete days of testimony from 18 live witnesses and seven over video.
The joint streaming venture was slated to include linear television channels owned by the three companies, a bundle that FuboTV argued would restrict competition and violate antitrust law. These networks would include ESPN, ESPN2, ESPNU, SEC Network, ACC Network, ESPNEWS, ABC, FOX, FS1, FS2, Big Ten Network, TNT, TBS and truTV, along with ESPN+. ESPN, a subsidiary of The Walt Disney Company, FOX and Warner Bros. Discovery would share one-third ownership in the joint streaming venture.
Counsel for FuboTV stated that it would run out of money by the first quarter of next year should Venu Sports successfully launch, thus resulting in insolvency. 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 in potential violations of antitrust and communication laws.
“The Court has observed each witness’s demeanor, considered the content of their testimony within the context of the documentary evidence and entire facts of this case, and heard argument from the lawyers regarding how the governing law applies to these facts,” Garnett said in her opinion and order filed on Friday. “All this, in addition to the voluminous briefing submitted by the parties, has informed the Court’s conclusion that Fubo is ultimately likely to succeed in demonstrating that the JV will substantially lessen competition or tend to create a monopoly in contravention of this country’s antitrust laws.”
Without a successful appeal, early resolution or out-of-court settlement, this preliminary injunction would remain in place until a trial, a potential date for which remains unknown. Within the testimony, FuboTV argued that Disney, FOX and Warner Bros. Discovery would be bundling 60-80% of the live sports streaming rights in the United States, something that would jeopardize its virtual multichannel video programming distributor (vMVPD).
The company also claimed that it was not granted a chance to provide a sports bundle similar to the joint streaming venture. Instead, it argued that the triumvirate of media entities was leveraging their sports portfolio to force other companies to carry other expensive and unpopular channels to obtain the licensure to the sports assets. The defendants in the case will be appealing the ruling.
“We respectfully disagree with the court’s ruling and are appealing it,” ESPN, a subsidiary of The Walt Disney Company, FOX and Warner Bros. Discovery, said in a statement. “We believe that Fubo’s arguments are wrong on the facts and the law, and that Fubo has failed to prove it is legally entitled to a preliminary injunction. Venu Sports is a pro-competitive option that aims to enhance consumer choice by reaching a segment of viewers who currently are not served by existing subscription options.”
The court explained that in order for it to grant a preliminary injunction, Fubo needed to exhibit that it would be likely to succeed on the merits of its claims and that it would suffer irreparable harm without it. Moreover, the plaintiffs also had to prove “that the balances of equities tip in its favor, and that the injunction does not harm the public interest.” The company called the ruling “significant” as it fought against three media conglomerates to create a competitive streaming marketplace for the consumers.
“Today’s ruling is a victory not only for Fubo but also for consumers. This decision will help ensure that consumers have access to a more competitive marketplace with multiple sports streaming options,” David Gandler, co-founder and chief executive officer of Fubo, said in a statement.
“But our fight continues. Fubo has said all along that we seek equal treatment from these media giants, and a level playing field in our industry. The proposed joint venture was only the latest example of anticompetitive 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 cheat consumers from deserved choice.
“A fair and competitive marketplace is necessary to provide consumers with multiple, robust and more affordable sports streaming options. We will continue to fight for fairness and for what’s best for consumers.”
Whereas FuboTV recognized the joint streaming venture as anti-competitive, the defendants felt that it would be pro-competitive as they worked to combat cord cutting. The court noted that Fubo has yet to have a profitable quarter, a trend that continued in the most recent quarter despite having 1.45 million paid subscribers and $328.7 million in total revenue. Additionally, it explained that the bonus allocated to Venu Sports chief executive officer Pete Distad is based on “subscriber goal attainment.” A metric divulged in the document is that if the service reaches 9 million subscribers by 2027, he would receive 800% of his base bonus.
“But if the JV launches, witness testimony and documentary evidence firmly establish that a swift exodus of large numbers of Fubo’s subscribers (both current and reasonably anticipated near-term future subscribers) is likely, and that Fubo’s bankruptcy and delisting of the company’s stock will likely soon follow,” Garnett wrote. “These are quintessential harms that money cannot adequately repair.”
