Lawmakers Target Disney-Fox-Warner Sports Streaming Platform Over Antitrust Concerns

Lawmakers are ramping up scrutiny of streaming sports bundle Venu, with the aim of blocking the joint venture.

In a letter, Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (D-Vt.) and Rep. Joaquin Castro (D-Texas) called on the Justice Department and Federal Communications Commission to initiate a probe of Venu and stop Disney, Fox and Warner Bros. Discovery from pooling their sports licensing rights to form the streaming service. They say that the platform will result in price hikes by further consolidating the market for live sports.

The streaming bundle is targeting a fall launch at $42.99 per month. Subscribers, who will be locked in at that price for a year, will be able to access a number of live, linear channels, including ESPN, Fox, ABC, TNT and TBS, as well as ESPN+. Between the three networks, they have rights to the NFL, NBA, MLB and NHL, plus college sports and pro tennis.

The service is slated to compete against YouTubeTV, which costs roughly $70 per month but also provides access to sports from NBC and CBS, and Fubo, which in February sued the media giants over the joint venture.

That lawsuit alleges that Fubo is being forced to carry dozens of pricey, nonsports channels as a condition of licensing sports rights from the companies in a scheme to stifle competition. In their letter, the lawmakers echo those concerns. They claim that Venu doesn’t give competitors the option of carrying only live sports programming, instead tying a bundle of less desirable channels to the sports content.

ESPN, for instance, is a critical channel for sports streaming platforms. By bundling ESPN with the network’s other channels, Disney has the “power to effectively maintain a competitive advantage” for Venu, which has the option of carrying solely ESPN opposed to rivals who’re charged higher prices to access that bundle. In 2022, Disney was sued by YouTube TV subscribers, who alleged violations of antitrust law and pointed to business dealings that effectively grant the company the ability to “set a price floor” for the market and push up prices across the industry by raising the prices of its own offerings.

“In the sports streaming context, the owners of broadcast rights for sporting events leverage their market power over highly demanded content to force content distributors to purchase content bundles that include essential content and related, less desirable programming,” the letter states. “For these companies, bundling functionally resembles a merger—allowing them to coordinate their market power over content rights to sell larger bundles and capture an expanded subscriber base.”

The lawmakers say the joint venture will ultimately result in higher prices because it eliminates incentives for the companies pooling their rights to compete against each other for licensing deals. According to studies cited in the letter, viewers reported spending an annual average of $552 on streaming services, with 44 percent indicating that costs have increased over the past year amid increased bundling and consolidation. In 2023, the cost of major streaming platforms rose by nearly 25 percent. By funneling over half of all major U.S. sports events onto a single service, Disney, Fox and WBD will have the “power to force out competition and set a price floor,” likely resulting in “higher-priced games, fewer viewing options and less variety of telecasts,” the letter says.

In addition to violations of antitrust law and the merger guidelines, which were revised last year to account for deals that further consolidate highly concentrated industries, the lawmakers argue the joint venture violates FCC rules barring a single company from owning stations that reach more than 39 percent of households. Disney owns ABC, as well as eight broadcast TV stations in eight markets, while Fox has a broadcasting arm and 29 stations in 18 markets. Venu will retransmit ABC and Fox broadcast network feeds via local stations affiliated with each network, according to a Gray TV earnings call. Under the joint venture, the media giants will control the distribution of more than 80 percent of nationally broadcast sports games.

The bundle doesn’t include CBS Sports or NBC Sports, meaning there aren’t several NFL and college games available on the service. And since the NBA reached new deals with NBC and Amazon, Venu is slated to lose roughly half its pro basketball games.

In the lawsuit initiated by Fubo, a federal judge is currently hearing arguments on whether to issue a preliminary injunction to block Venu.