Judge temporarily blocks Venu Sports launch

Venu Sports, the direct-to-consumer streaming service that will combine the resources of ESPN, Fox Sports and TNT Sports, is ensnared in a lawsuit that may prevent the service from debuting at the start of the NFL season as planned after a judge temporarily blocked its launch, court documents from litigation filed by Fubo show.

The U.S. District Court of the Southern District of New York found that Fubo, a different online television provider, produced sufficient evident that the joint venture “will at least tend to lessen competition in the Live Pay TV Market,” per the court ruling.

Judge Margaret Garnett pointed out that Disney, Fox and Warner Bros. Discovery control “at least 60 percent of all nationally broadcast U.S. sports rights” plus 98 percent of the rights for professional baseball, hockey, football, and basketball playoff games.

“This means that alone, Disney, Fox, and WBD are each significant players in live sports licensing, who otherwise compete against each other both to secure sports telecast rights and to attract viewers to their live sports programming. But together, they are dominant,” Garnett said. “…Because of their market power and the undisputed value of their products, the (joint venture) Defendants have significant leverage in carriage negotiations with distributors. Their sports content enables them not only to charge high license fees, but also secure favorable distribution and contractual provisions pertaining to their non-sports networks as well.”

Warner Bros. Discovery, Fox and ESPN expressed their disagreement with the ruling and said they intend to appeal it in a statement Friday.

“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.”

Fubo’s co-founder and CEO David Gandler called the ruling “a victory not only for Fubo but also for consumers.”

“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,” Gandler said in a statement Friday.

The ruling comes a little over a week after Sens. Elizabeth Warren and Bernie Sanders and Rep. Joaquin Castro sent a letter to the Department of Justice asking it to investigate and potentially prevent Disney, Fox and Warner Bros’ from starting the joint venture. In the letter, the three Democrats urged the Department of Justice to examine Venu Sports “and oppose it if it violates antitrust or telecommunications laws or regulations,” The Athletic previously reported.

Venu Sports was slated to launch soon at a rate of $42.99 per month. Subscribers will not need a cable subscription and will be able to access all the programming and games from the three networks and their affiliates (such as ABC and Fox), plus ESPN+, the network’s extra direct-to-consumer service that features more niche sports.

What to make of the ruling

The impact of Venu Sports on sports watching has been slightly overrated from the start; however, the fact that a federal judge stopped ESPN, Fox and TNT Sports from teaming up in a joint venture skinny bundle for sports fans is a setback as the trio wanted to begin by football season. Instead, this is a win for the old bundle, as they want to be able to offer these types of smaller packages in the future.

Whether this ruling is overturned on appeal or not, Venu, at least in this iteration, has always been an incremental step as it doesn’t solve the problem of finding all big time sports in one spot. Fox CEO Lachlan Murdoch has said the goal for Venu Sports is to have 5 million subscribers in five years. Those are potentially helpful for these companies, but not game changing. It doesn’t solve all the sports viewers’ issues, which — regardless of where the courts end up — is the issue.

As we said back in February, when the joint venture was first announced, the TV executives could one day invent something that has all sports in one place — they could call, I don’t know, cable. — Andrew Marchand, senior sports media columnist 

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(Photo: Nesimages/ Michael Bulder / DeFodi Images via Getty Images)