In Latest Venu Sports Salvo, Fubo Says Disney, Fox And Warner Bros. Discovery Have “Artificial Advantage” In Streaming

As a federal appeals court continues to review a lower court’s ruling against Disney, Fox and Warner Bros. Discovery, pay-TV operator Fubo has reasserted its main argument against the media giants.

Venu Sports, the joint venture backed by the companies, would “substantially” lessen competition, Fubo argued in a brief filed Monday. (Read the full brief HERE.)

The companies have given Venu “a built-in advantage: the exclusive right to distribute their combined, commercially critical sports content without also having to pay for – and force viewers to pay for – unwanted non-sports channels.” Furthermore, Disney, Fox and WBD “have structured the JV to avoid anything like competition on the merits. Its artificial advantage will capture hundreds of thousands of subscribers and tens of millions of dollars from Fubo alone, driving Fubo into insolvency, and destroying or damaging other distributors.”

After the three media companies formed the streaming venture last February, Venu Sports, Fubo filed a lawsuit calling the service anti-competitive. Last summer, a judge in U.S. District Court in New York stunned the media industry by siding with Fubo, granting a preliminary injunction to block Venu from launching as scheduled in time for the football season. Venu’s three backers, which collectively have spent more than $50 million preparing Venu to go live, then filed an appeal to the Second Circuit, laying out their objections to the ruling in a brief filed in September.

Fubo’s 60-page response draws from emails and comments from executives at the three media companies. It highlights a de facto “non-compete” agreement among them to decline to make their networks available in any new settings outside of Venu for at least three years. It also notes that the three companies control more than 50% of live sports rights in the U.S. (with NBCUniversal and Paramount Global are notably absent) but quotes execs asserting even bigger market share, closer to 60% or even 75%.

The case has drawn considerable industry attention given the rapidly evolving dynamics of pay-TV and the rise of streaming bundles. Amicus briefs have been filed on Fubo’s behalf by DirecTV and Dish Networks, as well as several politicians from both sides of the aisle. While attorneys for Disney, Fox and WBD have pointed to an unsuccessful antitrust claim brought in 2011 by consumers alleging monopoly behavior by pay-TV operators (Brantley et. al v. NBCUniversal), Fubo maintains that the case is not helpful to the defense.

Fubo has maintained since filing the case that Venu represented exactly the kind of “skinny sports bundle” it had sought to launch since the company was founded in 2015. When it attempted to license sports programming without agreeing to also carry major companies’ general entertainment offerings, Fubo says it was rebuffed. While Venu’s backers have promoted the service as being something new, the lower court asserted that the concept was actually not new, and was also merely an aggregation of 15 linear network feeds. Even in the case of something new hitting the market, Fubo’s brief assets, “there is no bright-line rule that every new product is procompetitive. The launch of a new product can be anticompetitive when part of an anticompetitive scheme.”

Fubo’s main complaint is scheduled to go to trial next October, regardless of the outcome of the appeal of the injunction.