Fubo, Dish Network and DirecTV are among a group of eight companies that have co-signed a letter urging Congress to hold hearings on the future of competition in the pay-TV market.
The co-signers, which also include Newsmax, American Economic Liberties Project, Sports Fan Coalition, Open Markets Institute and the Electronic Frontier Foundation, argue that Fox, Disney and Warner Bros. Discovery’s upcoming sports streaming joint venture raises “serious competition concerns that call for Congress’s immediate oversight.”
“In addition to controlling 80% of all national live sports broadcasts, the JV will control approximately 55% of all live sports (regional and national). We cannot think of any scenario in the history of the United States where consumer interests have been served when such an important industry – here, access to live sports – is effectively controlled by three programming giants which decided to combine forces instead of competing against each other,” the letter states. “Worse yet, these same programming giants enforce anticompetitive and inflationary contract restrictions on distributors that will insulate the JV’s streaming service from head-to-head competition because these contract restrictions prohibit competing distributors from offering consumers their own “skinny,” live sports bundle.”
Unless Congress intervenes, the group warned that the offering will “eventually dominate the distribution market for live sports and will drive out competition, leaving consumers captive to the JV for live sports.”
The letter cited policymakers previously stepping in with the 1992 Cable Act, which created program access rules to prevent vertically integrated cable operators from discriminating against new entrants in the pay-TV business, such as satellite TV providers trying to compete with cable.
“We are at the same inflection point now. The JV partners demand that their competitors offer ‘big fat bundles’ of programming (as described by Disney’s CEO3) that include many unwanted but expensive channels, while their own JV service offers a much skinnier package consisting only of “must have” sports channels,” the letter concluded. “Americans love their live sports and entertainment, and they expect Congress to ensure competition and choice in accessing these shows. We thus urge you and your colleagues to hold hearings as soon as possible on the future of pay TV.”
The letter is addressed to Senate Commerce Committee chair Maria Cantwell and ranking member Ted Cruz, Senate Judiciary Committee chair Dick Durbin and ranking member Lindsey Graham, House Energy & Commerce Committee chair Cathy McMorris Rodgers and Frank Pallone and House Judiciary Committee chair Jim Jordan and ranking member Jerry Nadler.
The letter comes as Fubo is suing to block the JV, alleging its the latest move in a years-long campaign of anticompetitive practices by Fox, WBD and Disney to block its business. The antitrust lawsuit has received declarations of support from executives at DirecTV and Dish. A judge has set a preliminary injunction hearing for Aug. 7.
The trio have filed motions seeking to dismiss the lawsuit, arguing it is “nothing more than a transparent attempt to use litigation to get better commercial terms from its suppliers than it has been able to negotiate at the bargaining table.”
“The service is a pro-consumer offering to a segment of viewers who currently aren’t served,” a spokesperson for the joint venture told TheWrap. “It will expand consumer choice by creating an incremental, nonexclusive option for this segment of viewers to watch their favorite sports.”
Additionally, Nadler and Rep. Joaquin Castro sent a letter to the trio last month asking them to answer 19 questions about how the offering impacts access, competition and choice in the sports streaming market. Nadler and Castro set an April 30 deadline and asked them to copy the Department of Justice on the responses. In February, Bloomberg reported that the DOJ was planning to launch an antitrust review of the offering.
The unnamed service, set to launch this fall, will offer access to content from linear sports networks including ESPN, ESPN+, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, FOX, FS1, FS2, BTN, TNT, TBS, truTV, as well as the ABC network. It will include content from the NFL, NBA, WNBA, MLB, NHL, NASCAR, College Sports, UFC, PGA TOUR Golf, Grand Slam Tennis, the FIFA World Cup, cycling and much more. Subscribers would also have the option to bundle the product with Disney+, Hulu and Max.
Fox, Disney and WBD will each own a 1/3 stake, have equal board representation and will license their sports content to the joint venture on a non-exclusive basis. Former Hulu and Apple executive Pete Distad will serve as the JV’s CEO, reporting directly to the board and assembling the independent management team that will be based in Los Angeles.
Analysts have estimated that the JV’s pricing could fall anywhere between $35 to $50 per month. Fox CEO Murdoch suggested it would be in the “higher ranges of what people are talking about.” An individual close to the venture told TheWrap that pricing would be lower than YouTube TV’s $72.99 per month base plan.
When it comes to revenue from the partnership, the companies are expected to earn a similar carriage fee rate as they do through other distribution channels where their networks are available. The trio’s members will each be responsible for selling their own advertising and will retain all of the advertising revenue from their content, the individual said.
Murdoch has previously said he’s “not overly concerned” about the potential for regulatory scrutiny, noting the offering is targeting 50 million to 60 million “cord never” households that aren’t currently being served.
“We’re proceeding as though this is going to clear basically government scrutiny,” Disney CEO Iger previously told CNBC.
The venture is aiming for 5 million subscribers within the first five years of its launch.
