Venu Sports — the planned streaming service from Walt Disney Co., Fox Corp. and Warner Bros. Discovery — was dealt a significant setback Friday when a federal judge put a freeze on the service’s launch.
Rival sports streamer Fubo had challenged the joint venture, saying its formation was a violation of U.S. antitrust laws.
U.S. district Judge Margaret Garnett appeared to agree, issuing a temporary injunction that said Fubo was likely to prevail on claims that the partnership would “substantially lessen competition and restrain trade.”
The aim of the joint sports platform, announced in February, is to provide a one-stop destination that would appeal to younger sports fans who are bypassing traditional pay-TV subscriptions. The three traditional media companies joined forces in an effort to better compete with deep-pocketed tech companies, including Amazon Prime Video, that are spending heavily to offer live sports.
Fubo Chief Executive David Gandler called the ruling a victory for his company and consumers.
“This decision will help ensure that consumers have access to a more competitive marketplace with multiple sports streaming options,” he said in a statement.
Fubo filed its lawsuit in April.
The New York-based company, which launched Fubo TV nine years ago, argued that its contracts with TV networks, including the Venu partners, forced it to carry nonsports channels it did not want. That resulted in Fubo having to charge “steep prices” to cover its licensing costs, according to the judge’s ruling.
If Venu were to go forward, witness testimony and evidence “firmly establish” that Fubo’s survival would be in doubt, the judge wrote.
“Fubo’s bankruptcy and delisting of the company’s stock will likely soon follow,” Garnett wrote in her ruling. In effect, Venu would be the only option for customers who want a live-sports-only service, she argued.
Together, Disney, Warner Bros and Fox own at least 60% of all nationally broadcast U.S. sports rights, the ruling found. The three have control over almost 75% of the market for the licensing rights for the five major sports leagues, including the NBA, NFL and MLB, and 98% of playoff games for professional basketball, hockey, football and baseball.
Fubo TV plans begin at $32.99 per month, and more premium versions are offered at $79.99 and $99.99 per month.
The company was staggered when the three media companies teamed up to create a similar platform that would be offered at $42.99 a month for just sports.
“The proposed collusive arrangement will cause even higher prices and even worse terms for third-party video distributors such as Fubo — and the millions of American consumers who rely on those services,” Fubo argued in its lawsuit.
The companies, in a statement, pushed back on the judge’s ruling.
“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,” ESPN, Warner Bros. Discovery and Fox said in a joint statement. “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 three companies were racing to launch the service this fall in time for the pro football season, which begins next month.
The service was designed to pool content from the three media giants, which have rights to the NFL, NBA, Major League Baseball, National League Hockey, major pro tennis tournaments and college sports. The companies planned to bundle Venu with their services, ESPN+, Max and Hulu.
El Segundo-based DirecTV supported Fubo TV’s position in court, saying pay-TV distributors needed more flexibility so they could offer smaller and more focused bundles to consumers.
“We are pleased with the court decision and believe that it appropriately recognizes the potential harms of allowing major programmers to license their content to an affiliated distributor on more favorable terms than they license their content to third parties,” DirecTV communications chief Jon Greer said late Friday in a statement.
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