Sens. Elizabeth Warren and Bernie Sanders have joined Reps. Joaquin Castro and Jerry Nadler in expressing concern over the upcoming launch of Venu Sports, warning that the offering could enable Fox, Disney and Warner Bros. Discovery to “discriminate against competitors and increase prices for consumers.”
“This massive new sports streaming company would be poised to control more than 80% of nationally broadcast sports and more than half of all national sports content, putting it in a position to exercise monopoly power over televised sports,” the lawmakers wrote in a letter to the Department of Justice and Federal Communications Commission on Tuesday. “The television industry has become increasingly consolidated following decades of content providers engaged in mergers and acquisitions that continue to reduce competition. There is no indication that this trend will abate as content providers, broadcasters and streaming companies vertically integrate in a bid to control content from production to consumption.”
Warren, Sanders and Castro argue that Venu is a continuation of that trend and that its joint venture status “should not prevent antitrust and telecommunications regulators from giving it the scrutiny it deserves.” It is worth noting, however, that they have not officially filed anything with the Commission, nor does the FCC typically regulate streaming services.
“Under the guise of consumer choice, Fox, Disney and Warner Bros. have proposed to stop competing for live sports and jointly develop a product that could allow them to leverage their joint dominance over sports programming to favor their own streaming network, reducing competition and depriving consumers of choices in over-the-air, cable or streaming providers,” they added. “DOJ and FCC should closely scrutinize this transaction and take immediate action to block it if it violates antitrust law, or if it does not serve the public interest, convenience and necessity.”
Bloomberg previously reported that the DOJ was planning to launch an antitrust review of Venu. In a separate inquiry from Castro and Nadler, the lawmakers asked Fox, Disney and WBD to address questions they had and to copy the DOJ on those responses.
A spokesperson for the DOJ declined to comment. Representatives for the FCC did not immediately return TheWrap’s request for comment.
Slated to launch this fall subject to regulatory approval, Venu Sports will offer subscribers thousands of live sports from all the major sports leagues and top college conferences, with access to ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, ABC, FOX, FS1, FS2, BTN, TNT, TBS, truTV and ESPN+ for $42.99 per month. The offering is aimed at sports fans outside of the traditional TV bundle and is available directly through a new app.
Anyone who signs up for Venu’s launch price will be able to receive the service for 12 months at that price from the time of sign up, with the ability to cancel at anytime. A seven-day free trial will also be available.
Content will include live games and event coverage for 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 and F1 auto racing, and more.
It will also include studio shows and pre- and post-game programming, such as ESPN’s “SportsCenter,” “First Take,” “Get Up!,” “College GameDay” and “The Pat McAfee Show,” Fox’s “NFL Sunday,” “The Herd With Colin Cowherd,” “First Things First,” and TNT’s “Inside the NBA,” as well as a library of on-demand sports content, including ESPN’s “30 for 30,” ESPN+ originals, ESPN Films, documentary programming from Fox Sports Films and more.
Subscribers will also have the ability to bundle Venu with Disney+, Hulu or Max.
The lawmakers argue that Venu would “consolidate the sports programming of the second, fifth and ninth highest revenue media companies in the world” and allow the trio to use its extensive control over licensing rights to exert joint control over live sports from distribution through broadcast and would vertically integrate the sports streaming market by offering a new platform for its licensed content.
They argued that the proposed structure gives Venu’s partners a “clear financial incentive to preference their own streaming platform over alternative sports streaming providers in licensing and bundling deals.”
“If this JV is permitted to proceed, competitors would be forced to negotiate with Fox, Disney and Warner Bros. for access to over half of the major sporting licensing rights while simultaneously competing against these companies to offer the best product to broadcast or stream these programs,” the letter continued. “Competitors of the streaming platform have argued that the parent companies do not offer similar opportunities to carry only live sports programming, instead requiring competitors to carry a bundle of channels that often includes much less desirable programming — driving up costs for the streaming services and consumers.”
Warren, Sanders and Castro also argued that Venu further “removes all economic incentive for these entities to continue competing for sports licensing rights” by allowing the companies to “coordinate their market power over content rights to sell larger bundles and capture an expanded subscriber base.”
“For consumers, this consolidation could lead to higher prices and fewer choices,” they added. “By funneling over half of the major sporting events in the U.S. into one platform, Disney, Fox and Warner Bros. 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.”
If the DOJ were to treat Venu as a merger, the lawmakers noted that it would raise additional antitrust issues. They cited a complaint filed by Fubo that alleged Venu would receive a market concentration score of 3,400 on the DOJ’s Herfindahl-Hirschman Index — more than doubling concentration in nationwide sports licensing and surpassing the agency’s threshold for a highly concentrated market (Fubo and Venu’s partners are in hearings in the U.S. District Court for the Southern District of New York this week after the former filed an antitrust lawsuit seeking a preliminary injunction to block Venu).
They also contend that Venu is not consistent with the goals of the FCC’s national ownership cap, which requires that no single company owns stations that reach more than 39% of U.S. television households.
“Given Venu’s potentially wide-reaching and complex framework, which is expected to involve the parent companies’ broadcast stations and affect other broadcasters, we believe that the FCC should carefully consider whether broad authority extended by Congress covers this transaction or portions of the transaction,” the lawmakers wrote.
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.
The business trio previously said they would continue to bid for sports rights and negotiate with distributors separately and independently, and that they are targeting 1 million subscribers in Venu’s first year of launch and 5 million subscribers in its first five years. It is currently expected to launch this fall.
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, an individual close to the venture previously told TheWrap.
Representatives for Disney, Warner Bros. Discovery and Fox declined to comment.
