The launch of Venu Sports, the sport streaming joint venture (JV) between Disney, Fox and Warner Bros. Discovery (WBD), has been blocked by a US judge, who granted the motion for a preliminary injunction brought by FuboTV, a rival sport streaming service.
Venu was initially due to launch in the next few months, but the ruling delays the release until 2025 or later. The injunction remains in place until the case goes to trial next year, but the defendants have confirmed they will appeal the decision.
Meanwhile Fubo’s litigation continues against what it calls a “sports cartel”. The streaming company filed an antitrust lawsuit in February, accusing Disney, Fox and WBD of monopolising the sports streaming market. The suit alleges that the companies have attempted to block Fubo’s streaming business, with Venu Sports the latest example of this campaign. The company also suggested that the trio charges Fubo more for content than other distributors, and claims to have incurred billions of dollars in damages as a result.
Fubo warned US District Judge Margaret Garnett that the release of Venu could put the company out of business, while diminshing choice and raising prices for consumers of live sport content.
Garnett agreed that the companies would wield “near-monopolistic control” over the market. She called the scenario “strikingly similar” to a case from 1981, when Columbia Pictures tried to launch a cable channel with exclusive access to new films. The move was blocked on grounds that the channel would reduce options for consumers and stifle competition in the cable TV market.
Fubo welcomed the New York judge’s decision, alongside support from fellow US distributor DirecTV, which backed Fubo’s motion. “Today’s ruling is a victory not only for Fubo but also for consumers,” said Fubo CEO Dave Gandler. “This decision will help ensure that consumers have access to a more competitive marketplace with multiple sports streaming options.”
Tactical subscriptions
While the injunction could still be lifted by an early resolution or out-of-court settlement, the decision casts some doubt on the future of the proposed streaming service. The JV is designed to accelerate the companies’ shift to streaming, leveraging their status as big-hitters in the live sports arena to stem losses from their linear networks. WBD was recently considering spinning off its linear TV business, while Disney has explored a partial sale of its sport network ESPN, before pivoting to the JV strategy. Delays to these plans could cause the companies to revise their tactics.
Meanwhile Fubo has been gaining traction in North America, reaching 1.45 million paid subscribers according to its latest earnings. The company posted 26 percent YoY revenue growth during the latest quarter, while average revenue per user (ARPU) climbed five percent to hit $85.69. Fubo stock jumped 20 percent at the news of the injunction, although the company’s stock is down 51 percent this year.
However, the launch of Venu Sports at a proposed price of $42.99 per month would undercut Fubo’s streaming package, which starts at $79.99 per month. Fubo argues that “bundling” clauses in contracts with TV networks (including the defendants) have inflated the company’s subscription prices. These contracts effectively force Fubo to pay for unwanted non-sports channels, according to the ruling, as a condition of securing the rights to the sports channels. These costs are then passed on to the consumers, who rarely watch the non-sports channels.
Conversely, the JV would be the first “unbundled” sport streaming service, according to the ruling. The judge found that sports-focused channels have never been unbundled from their non-sports offerings, and those channels have essentially lifted these bundling clauses for their own streaming offering.
“Even after limited and expedited discovery, it is indisputable that the JV defendants have long used the combination of bundling and minimum penetration requirements to make live pay TV distributors carry content they otherwise would reject, or would only offer based on express customer preferences, and therefore, those distributors are forced to pass those superfluous costs on to consumers who, in many cases, also do not want that content, or would not pay for the content if they had the choice,” said the ruling. “Now, for the first time ever, the JV defendants, who are otherwise competitors both in securing the rights to broadcast live sports and in securing viewers for their content, are granting a firm a license to unbundled sports content. That firm is their own JV.”
