ESPN Gains Support of Six AGs in Appeal of Venu Sports Decision

FuboTV’s victory in the Southern District of New York last month was a major setback for Walt Disney, ESPN, Fox, Warner Bros. Discovery and Hulu’s plan to launch sports-centric streaming platform Venu Sports this fall. 

But in law, just like in sports, sometimes there are rematches. 

Those media companies are now appellants in a proceeding before the U.S. Court of Appeals for the Second Circuit. They’re banking on the Second Circuit finding that U.S. District Judge Margaret M. Garnett fumbled the application of federal antitrust law when she granted Fubo’s motion for a preliminary injunction that blocks Venu Sports’ release. 

Barring a successful appeal or an out-of-court settlement, Garnett’s injunction will remain in place at least until a trial, which likely won’t occur until 2025 or later. By that point, it’s unclear what level of interest these competing companies would still have in offering Venu Sports. They operate in a rapidly evolving industry and their valuation of Venu Sports might change by next year.

The appellants recently filed a 77-page brief outlining why they contend the Second Circuit should reverse Garnett’s order and vacate her injunction. On Friday, the appellants gained support when the attorneys general of Florida, Alabama, Iowa, Kentucky, Mississippi and South Carolina—all of whom are Republicans—filed an amicus brief insisting that Garnett erred.

The amicus brief was signed by Florida Solicitor General Henry C. Whitaker and submitted by Florida Attorney General Ashley Moody, who earlier this year pursued legal action against the ACC related to the conference’s contractual dispute with Florida State. Moody sought records that included the ACC’s contracts with ESPN. The lawsuit ended last month, with the ACC providing Moody’s office with a redacted copy.

At issue now is Garnett’s ruling. 

A former deputy U.S. attorney for the Southern District of New York who President Joe Biden nominated to the bench last year, Garnett was persuaded by Fubo’s portrayal of rival companies (the appellants) unlawfully conspiring to monopolize their live sports offerings through Venu Sports. Fubo warned the release of Venu Sports, which is expected to cost $42.99 a month, could put it out of business. 

To that end, Fubo insisted that Venu Sports would diminish competition in the marketplace of live sports content and eventually raise consumer prices. Garnett also reasoned that “American consumers” should “not have to simply take” Venu Sports’ companies “word for it and hope for the best.”

But the appellants, through a brief submitted by J. Wesley Earnhardt and other attorneys from Cravath, Swaine & Moore as well as Dechert and Weil, Gotshal & Manges, argue that Garnett’s ruling “is the opposite of what the antitrust laws seek to achieve.” The appellants emphasize that live sports content on Venu Sports would be nonexclusive and Venu Sports would lack CBS, NBC, CNN, Fox News and other sports and non-sports networks. Both of those factors, they claim, promote market competition. As the appellants tell it, Venu Sports is designed to attract a lower-cost alternative for “price-conscious sports fans who have dropped out of, or never been part of, the traditional TV ecosystem.”

The appellants also contend Garnett failed to appropriately weigh U.S. Supreme Court precedent, including holdings which say losing customers to a lower-priced competing product doesn’t count as an injury that antitrust law remedies. If Fubo consumers decide to drop Fubo for Venu Sports because of its lower price, the appellants say Fubo’s harm is not an antitrust injury. It instead reflects a competitor providing a more attractive product to consumers.

Further, the appellants argue Garnett erred by concluding it was anticompetitive for them to not offer the same terms—a skinny live sports bundle—to Fubo or similar companies that are structured as multichannel video program distributors. There are several Supreme Court rulings that indicate a company has no duty to deal with a rival or offer them comparable terms.

Buttressing these arguments, the AGs stress that since they enforce state and federal antitrust laws, they “have a strong interest in promoting procompetitive conduct” and in safeguarding consumers from anticompetitive conduct. As the AGs see it, Venu Sports is a joint venture that would provide consumers a service that they currently can’t get: the ability to obtain “a vast array” of sports content without having to pay for unwanted bundled content. 

The AGs also assert that Garnett “appears to have fallen for” an “all-too-common gambit” in that she (they argue) let Fubo use the legal system “as a tool for protectionism.” The AGs add that courts ought to view lawsuits by competitors “with skepticism,” for otherwise they risk insulating companies from facing market realities.

In forthcoming court filings, Fubo’s attorneys will try to debunk these arguments.

They might draw from the support of elected officials, too. 

Last month U.S. Senators Elizabeth Warren (D-Mass.) and Bernie Sanders (D-Vt.), along with U.S. Rep. Joaquin Castro (D-Texas), wrote a letter to the Justice Department’s antitrust division in which they maintained Venu Sports would enjoy “monopoly power over televised sports.” Along those lines, they argued Venu Sports would “control more than 80% of nationally broadcast sports and more than half of all national sports content.”