Regulators Shouldn’t Blow the Whistle on Venu Sports Just Yet

Add Congress to the list of entities very concerned about the upcoming Venu Sports service.

Earlier this month, U.S. Representatives Jerry Nadler and Joaquin Castro sent their second letter to the CEOs of Disney, Fox and Warner Bros. Discovery, requesting more details on the companies’ joint-venture sports streaming platform and citing “insufficient” responses from the executives thus far.

With the Justice Department also reportedly probing Venu and a lawsuit pending against the partner companies, one would think the service is in danger of running seriously afoul of antitrust regulations. Certainly, the congressmen think so.

“We are concerned that this joint venture — which unites the owners of 80 percent of all sports media content — could reduce competition and leave consumers worse off,” Nadler and Castro wrote in their letter.

It’s a reasonable assumption, to be sure, upon hearing that three media behemoths are teaming up on a product, particularly in the high-profile streaming business. But even a slightly closer inspection reveals some of the key regulatory concerns surrounding Venu are overblown — or at least misdirected.

“Leave consumers worse off”? First of all, what consumer is going to complain about only needing one service to stream all of these sports, instead of three or more? Certainly, the entrance of yet another subscription platform into the crowded streaming space seems like cause for alarm, but Venu should give consumers a way to consolidate and reduce their subscriptions, rather than simply add another to the pile.

Furthermore, Venu is the kind of “skinny bundle” product for which consumers have long yearned, free of the unwanted channels that were part and parcel of the pay TV bundle for decades. Sports fans now have the option to receive much of the live sports content available via linear networks without paying the high price of a pay TV subscription — arguably these companies’ most pro-consumer move in years.

This also helps explain the hostility from Fubo, the plaintiff in the lawsuit against Venu’s co-owners. A virtual pay TV provider (also known as a virtual MVPD), Fubo asserts the media giants have “engaged in a years-long campaign to block Fubo’s innovative sports-first streaming business, resulting in significant harm to both Fubo and consumers.”

Translation: Fubo, presumably like every other pay TV distributor, would have loved to be able to offer a product like Venu and is now furious that the sports rights holders are selling it themselves.

I can’t speak to the legality, or the veracity, of the tactics Fubo claims were deployed against it — allegedly charging Fubo content licensing rates at least 50% higher than those for other distributors, for instance. But as far as Venu is concerned, Fubo’s argument that the service will hurt pay TV operators seems far stronger than its case that it will hurt consumers.

Virtual MVPDs have already been struggling to win over subscribers, with the majority of cord-cutters typically dropping out of the pay TV ecosystem entirely rather than converting from a traditional to virtual provider. With the launch of Venu, providers such as Fubo are going to be squeezed even harder, given the importance of live sports to their offerings.

Unfortunately for Fubo, that seems unlikely to convince antitrust regulators the service is bad for the market. As sports attorney Chris Deubert told Front Office Sports when the lawsuit was first filed in February, “Antitrust law protects competition. It does not protect competitors.”

Certainly, the media giants’ anti-skinny bundle policies look much more malicious when the companies are offering such a product themselves, and perhaps a judge or jury could be persuaded that these policies constitute anticompetitive behavior in this context.

But again, this has much more to do with the potential impact on pay TV providers than potential harm to consumers. True, if Venu draws enough subscribers, price-gouging could become an issue, but there is a price ceiling on the service; raising its monthly cost higher than that of a pay TV plan would defeat its purpose.

To be sure, there are valid concerns expressed in the lawmakers’ letter, namely regarding how Venu will be operated and whether the partner companies will engage in collusive behavior. And any partnership between such large players in such an oligopolistic space should indeed be subject to legal scrutiny.

But frankly, Venu should be nowhere near the top of anyone’s antitrust priorities, least of all a Justice Department still struggling to make its case against Big Tech. To put it in football terms, this is turning into a dogpile before the play has even begun.