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Fox, Disney, Warner Bros sports streaming venture facing scrutiny

Feb 21, 2024
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Illustration: Natalie Peeples/Axios

The forthcoming sports streaming joint venture from Disney, Fox and Warner Bros. Discovery has prompted a range of criticism that will loom around the government's reported review of the deal on antitrust grounds.

Why it matters: What type of action, if any, the Department of Justice takes threatens to delay the launch or even kill the service before it starts, not to mention cast a lengthy shadow over any future similar endeavors.

Catch up quick: FuboTV filed a lawsuit Tuesday in an attempt to block the planned service.

  • Fubo says the sports streaming JV would give those three networks less incentive to make their channels available on Fubo and other distributors, as well as charge Fubo above-market rates.

What they're saying: "I think this is a case that has real legs to it. A court should block this deal to protect consumers," said former FTC official David Balto, speaking to CNBC on Wednesday morning.

  • Once you take ESPN's market power and bundle it with other products, it increases the cost of those products, he noted in the interview.
  • "It's like telling the 800-pound gorilla, 'Here, eat more ice cream.'"
  • On the other side, Matt Bilinsky of Weinberg Gonser tells Axios, "the actual business analysis does not run in Fubo's favor."
  • Bilinsky continued: "These companies can simply make the argument that 'we have the financial wherewithal to purchase these TV rights, we're not obligated to share them with any distributor, everybody has to conduct an arm's length transaction.'"

Fubo has a better chance if it can prove that the three companies have been artificially inflating the price that Fubo has to pay to carry their networks compared to others, Bilinsky said.

  • "The strongest card that Fubo has to play are these Most Favored Nations clauses that they're claiming are phantom MFN clauses that are then being circumvented by the studios entering into streaming deals with Hulu and Google, and then compensating Hulu and Google through other means."

Zoom out: Pay-TV distributors are furious about the planned streaming service, which would create a skinny bundle consisting only of those three's TV networks that air sports, such as ESPN, TNT and Fox.

  • For years, distributors have sought to offer the same type of sports-centric TV package but met resistance from those same media companies who did not want their sports networks relegated to a pricier subscription tier.
  • League partners, including the NFL and NBA, are also reportedly angry with the networks over being left out of the planning process.

The bottom line: Even if Fubo's lawsuit doesn't go anywhere, it keeps the temperature up on the DOJ to strenuously probe the venture.

  • What Fubo and others really want is to be able to offer the same kind of skinny bundle as this forthcoming service. In its lawsuit, Fubo accused the three of preventing them from doing this.
  • Allowing other distributors to give its customers such a similar offering, however, could make it less enticing for consumers to sign up for Disney, Fox and Warner Bros.' streaming service.
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