Earlier in the month, FuboTV received a preliminary injunction in its antitrust lawsuit against The Walt Disney Company, FOX Corporation and Warner Bros. Discovery pertaining to the creation of Venu Sports, a direct-to-consumer joint streaming venture. The defendants are appealing the ruling to the U.S. Court of Appeals for the Second Circuit after noting that they had spent $74 million on the service and are hoping to launch in time for the college and NFL playoffs.
Although there have not been any trial dates currently instituted for the case, there is interest in a speedy appeal from the Defendants within this manner. On the latest edition of The Sporting Class podcast from Meadowlark Media, co-host David Samson outlined the logic behind the decision to grant such a preliminary injunction, an outcome that has prohibited the service from reaching the marketplace and building a subscription base at the moment.
“You can allow a lawsuit to continue [with a preliminary injunction], and that’s the lawsuit of FuboTV against the joint venture, and you can allege in a lawsuit an antitrust violation, and a judge can say, ‘Eh, not positive, but there’s a good enough chance that we’re going to let this go forward and survive a motion to dismiss by the defendant,’ in this case the joint venture,” Samson explained, “but this judge went even further and said, ‘Not only do we think the case should go forward, but you also can’t launch while we’re doing the case because we think that if you launch – FuboTV, we agree with you [that] you’re going to be irreparably harmed.’ That’s a major decision by the court, and it really does screw Venu.”
John Skipper, the co-founder and chief executive officer of Meadowlark Media, believed that the companies “deliberately obfuscated” what Venu Sports was in classifying it as a sports bundle. The plan for the service is to offer an array of linear television networks from across the three companies, including those that televise sports content, to subscribers at a monthly or annual rate.
“‘We don’t include other channels because they don’t have sports,’ but they said it was a sports bundle, and then they pretended and it was deliberately put together with an eye towards not creating more cord cutters,” Skipper said. “So this is not about cord cutters, so they assured their distribution partners, ‘[We are] not going to take any of your business away.’ That’s kind of B.S. And second, that it’s a sports bundle. Not really.”
When Skipper served as the president of ESPN, he remembers informing FuboTV that if it wanted content from The Walt Disney Company, it would need to pay the same thing as everyone else. The company had most favored nation clauses in its deals that restricted how much it could charge other companies, mandating that it must provide equal or more favorable rights and benefits received by other parties with whom it does business.
“We had one price, and I assume that FuboTV had to pay the same pierce, they’re angry, their business has struggled,” Skipper said. “They’re a light bundle now.”
FuboTV ended the fiscal second quarter with approximately 1.85 million paid subscribers worldwide, representative of a year-over-year decline. Edgar Bronfman Jr. serves as the executive chairman of the company’s board, a role he took on months after John Textor resigned from the job after the company merged with FaceBank Group. Bronfman recently pulled a bid for Paramount Global during the company’s go-shop period, ostensibly clearing the way for the two-step merger process to take place with Skydance Media. Samson believes that there was a deeper meaning to Bronfman having an interest in purchasing Paramount Global while serving in an executive chairman role with FuboTV.
“Him on one side fighting to the death as part of Fubo to stop this joint venture while putting together a bid to purchase the company that was not invited to be part of the joint venture,” Samson surmised. “I’m just telling you that these things don’t just happen. It would be in the best interest of Edgar Bronfman when he thought that he was getting Paramount or had a chance to get it that this joint venture disappears. It is clear to me.”
Samson articulated that he does not believe Venu Sports will ever launch, citing that judges oftentimes do not like to have their injunctions overturned. In response to Samson, Skipper stated that it is likely that this turn of events has made it difficult for the product to reemerge, especially as ESPN focuses on launching a direct-to-consumer platform next year. The company’s cable television distribution has diminished to under 68 million homes, according to data from Nielsen Media Research, down from a peak of about 100 million homes in 2011.
“I think it’s certainly likely that this does derail the product because I’ve always thought this product overwhelmingly benefitted The Walt Disney Company,” Skipper said, “and what they were really trying to do was to set up a bunch of options for you to get ESPN…. so I think this sort of helped with, ‘Oh, you can buy the standalone bundle, you can buy Venu or you can just keep your cable television subscription. You can do all those things,’ and now I’m not sure they need this middle state.’”
“And you’ve noticed that ESPN has been clear,” Samson added. “They’ve said, ‘Listen, Venu, no Venu, we’re doing DTC, direct to consumer. We’re making sure that you’ve got a product that’s going right to you.’”
