U.S. District Judge Margaret Garnett has blocked the launch of Venu Sports, a sports streaming joint venture between Fox, Disney and Warner Bros. Discovery.
In a ruling on Friday, Garnett granted Fubo’s request for a preliminary injunction, determining that it is “likely to succeed in demonstrating that the JV will substantially lessen competition or tend to create a monopoly in contravention of this country’s antitrust laws.”
“If the JV launches, witness testimony and documentary evidence firmly establish that a swift exodus of large numbers of Fubo’s subscribers (both current and reasonably anticipated near-term future subscribers) is likely, and that Fubo’s bankruptcy and delisting of the company’s stock will likely soon follow,” Garnett wrote in her decision. “These are quintessential harms that money cannot adequately repair.”
Shares of Fubo surged over 16% on Friday following the ruling.
Fubo filed an antitrust lawsuit in February alleging that the offering was the latest example of a years-long campaign of anticompetitive practices by the studios to block its business. The complaint also slammed the trio for forcing Fubo to carry dozens of expensive non-sports channels that its customers don’t want as a condition of licensing sports content.
In a post-trial memo on Tuesday, the company alleged that Fox, Disney and WBD “intend to create a monopoly in the skinny sports bundle market.” It cited internal documents that the service, codenamed Raptor, is likely to attract 50% to 67% of its subscribers from the pay-TV ecosystem and noted that incoming Venu CEO Pete Distad’s compensation is based on total subscriber growth and that he’s not encouraged to solely attract cord cutters.
The company’s executives testified that the service could lose between 300,000 and 400,000 subscribers before the end of 2024 due to the launch of Venu Sports, causing an “almost-immediate projected revenue loss between $75 million and $95 million.”
“Fubo will face insolvency absent an injunction. But there is literally no harm to multibillion media giants if Raptor is delayed for some period of time while the merits of the case can be fully resolved,” they argued. “While Defendants’ lawyers argued in summation that a delayed launch might cause harm, they made no efforts to introduce evidence that could support that argument and they pointed to no record evidence. They will not suffer anything other than a temporary delay, assuming they prevail at trial.”
In a statement, Fubo co-founder and CEO David Gandler called the ruling a victory for not only the company, but for consumers.
“This decision will help ensure that consumers have access to a more competitive marketplace with multiple sports streaming options,” he wrote. “A fair and competitive marketplace is necessary to provide consumers with multiple robust and more affordable sports streaming options. We will continue to fight for fairness and for what’s best for consumers.”
Fox, Disney and Warner argued that they are entitled to license their networks to anyone on any terms — or no terms at all — and that they are not required to help Fubo assemble a skinny sports bundle. They also argued that consumers can already create skinny bundles on their own and that Fubo’s “precarious financial condition” predates the JV and has nothing to do with Venu.
In the event of an injunction, the trio requested that Fubo be required to post a security in the form of a $100 million bond to cover the expected affiliate fees from Venu over the first four months.
“We respectfully disagree with the court’s ruling and are appealing it. 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,” Fox, Disney and WBD said in a joint statement. “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.”
Venu Sports, which was slated to launch this fall for $42.99 per month, was targeted at sports fans outside of the traditional TV bundle.
The companies planned to offer subscribers thousands of live sports from all the major leagues and top college conferences, with access to ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, ABC, FOX, FS1, FS2, BTN, TNT, TBS and truTV, as well as ESPN+. Content would’ve included live game and event coverage of the NFL, MLB, NHL, NBA, WNBA, NCAA Division I football and basketball, U.S. and international soccer, combat sports, Grand Slam tennis, championship golf, INDYCAR, NASCAR, F1 auto racing and more. Subscribers also would’ve had the option to bundle Venu with Disney+, Hulu or Max.
Fox, Disney and WBD were set to each own a 1/3 stake, have equal board representation and license their sports content to the joint venture on a non-exclusive basis. Rather than split revenue equally from the partnership, the companies said they would earn a similar carriage fee rate as they do through other distribution channels where their networks are available. The trio’s members would also each be responsible for selling their own advertising and would retain all of the advertising revenue from their content, an individual close to the venture previously told TheWrap.
The companies expected to attract 1 million subscribers by the end of the calendar year and 5 million within five years of launching, noting that they would continue to bid independently and compete with each other and elsewhere for sports rights.
Fubo received support from DirecTV and Dish in its legal fight.
“We are pleased with the court decision and believe that it appropriately recognizes the potential harms of allowing major programmers to license their content to an affiliated distributor on more favorable terms than they license their content to third parties,” a DirecTV spokesperson told TheWrap.
Lawmakers including Bernie Sanders, Elizabeth Warren, Jerry Nadler and Joaquin Castro also issued several letters expressing concerns about Venu, asking for more information on how the bundle could impact access, competition and choice in the sports streaming market while urging the Department of Justice and the Federal Communications Commission to investigate.
Despite the bump in Fubo shares, the company’s stock price is still down 32% in the past year, 51% year to date and 26% in the past six months.
