Unbundled Sports Streaming Service Benched by Legal Challenge from FuboTV
When it comes to sports streaming, fans are constantly on the lookout for the next big thing to enhance their viewing experience.
Enter the high-stakes drama surrounding "Venu Sports," a proposed game-changing streaming service from industry giants Disney, Fox, and Warner Bros. Discovery. Promising to deliver an unbundled, sports-centric platform, Venu seemed poised to revolutionize how we watch live sports. However, a legal showdown with FuboTV has thrown a wrench in the works, raising antitrust concerns.
The Sports Streaming Industry
The parties involved in this case are significant players in the media and entertainment industry. FuboTV, founded in 2015, is a streaming service focusing on live sports content. Disney, Fox, and Warner Bros. Discovery are major media conglomerates with substantial holdings in sports programming.
The live pay-TV industry traditionally involved multichannel video programming distributors like Comcast and DIRECTV, which bundle various channels, including sports, into packages for consumers. However, there has been a significant consumer shift toward virtual distributors and streaming video-on-demand services like Netflix, which offer content over the internet. Despite this shift, live sports remain a unique and valuable component of TV programming, attracting large audiences and commanding high advertising rates.
JV Sparks Antitrust Concerns
Last February, Disney, Fox, and Warner Bros. Discovery announced the formation of a joint venture (JV) to launch a new live sports streaming service branded "Venu Sports." The JV aimed to offer a unique sports-centric streaming platform “unbundled” from other entertainment channels—something that would have been a first in the industry. As the judge later explained, Venu would have been “the only option in the market for those television consumers who want to spend their money on multiple live sports channels they love to watch, but not on superfluous entertainment channels they do not.” Venu was scheduled to launch this past fall of 2024.
Shortly after Venu's announcement, FuboTV brought things to a halt. The live sports streaming service operator filed a lawsuit against the JV’s launch, alleging violations of federal and state antitrust laws. Fubo claimed that the JV's formation would lead to anticompetitive conduct. As Fubo argued, the media companies that provide its content force it to carry "unwanted non-sports networks that its consumers rarely watch.” Therefore, it couldn’t launch a pure sports service like the defendant companies.
On the other hand, Disney, Fox, and Warner Bros. Discovery control a substantial portion of live sports broadcasting rights, giving them significant leverage in the industry. Venu, by offering an unbundled sports, threatens to disrupt the existing market dynamics, leading to the antitrust claims.
Fubo Files for Injunction
Based on these concerns, Fubo filed a motion for a preliminary injunction to prevent Venu from launching. It argued that the JV was anticompetitive and would substantially lessen competition in the live pay TV market.
Fubo highlighted that Venu would have the exclusive right to license sports networks unbundled from other entertainment channels, capturing demand for sports-only streaming bundles. The company claimed that the defendants’ agreement incentivized them not to compete meaningfully with each other and allowed them to raise prices for distributors and consumers.
Fubo also emphasized that the JV would cause irreparable harm to its business, predicting a significant loss of subscribers and revenue, leading to its potential downfall. They argued that these harms could not be remedied by monetary damages, as the JV's launch would likely lead to FuboTV's insolvency—thus requiring the justice system to act ASAP in stopping the JV with a court-ordered injunction.
JV Defendants Fight Back
The JV defendants quickly filed a motion opposing that injunction. The defendant’s primary argument was that the JV was not anticompetitive but rather pro-competitive. They asserted that the JV would not concentrate market power or restrain trade because the companies involved in the venture would continue to license their networks to other distributors independently.
They also claimed that Venu would have extensive firewalls to protect sensitive commercial information from being shared among the JV Defendants, ensuring no potential concentration or collusion in the relevant markets.
The defendant companies claimed that the way Venu gets its content is different and creative, but this doesn't mean the JV will take over or control a whole new part of the TV market. They contended that Fubo's complaints about forced bundling were false--and even if they were true, these were legal and legitimate business practices. The defendants emphasized that any harm to Fubo was due to factors independent of the JV, derived from legitimate competition, or could be remedied by monetary damages later.
Court Grants Injunction
Ultimately, the court decided to grant a preliminary injunction to prevent Venu from launching based on several key findings. First, the court determined that FuboTV was likely to succeed on the merits of its antitrust claims under the Clayton Act, as the JV was likely to substantially lessen competition in the live pay TV market. The court found that the JV Defendants' practice of bundling sports with non-sports content and controlling a significant portion of live sports broadcasting rights created “anticompetitive conditions.”
Second, the court was swayed by Fubo’s argument that the company would suffer irreparable harm if Venu launched, as it would likely lead to FuboTV's business collapse. Additionally, the court noted that consumers and competition would likely be harmed if the JV launched before its legality under antitrust laws was determined.
Next Steps for Next Year
That was in August. Since then, the most recent development in the legal saga came last week, when the U.S. Justice Department and 16 states (including New York, Illinois, and California) filed their own amicus briefs in court, expressing support for the preliminary injunction handed down.
The filings urged the 2nd U.S. Circuit Court of Appeals to uphold the injunction, arguing that the proposed venture could violate antitrust laws by reducing competition and increasing prices. The Justice Department emphasized that JVs can be unlawful even if similar actions by a single entity might be legal. The states further argued that allowing rivals to collaborate could harm competition, mirroring the potential negative effects of forcing them to work together.
Meanwhile, six other states, including Florida, have sided with the media companies and Venu, asserting that the venture would provide more consumer choice. For now, the dispute is far from over, as many different parties with skin in the game await the appellate court’s decision.
Related Resources
- Jury Finds NFL Liable for Antitrust Violations in Upset Win (FindLaw's Legally Weird)
- Can I Sue a Satellite or Streaming Company? (FindLaw's Learn About the Law)
- Could College Athletes Be Legally Classified as Employees? (FindLaw's Legally Weird)
