A detailed view of a broadcast camera with the NFL shield and ESPN Monday Night Football logo is seen during a game between the Chicago Bears and the Minnesota Vikings at Soldier Field in Chicago on December 20, 2021.
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A US judge temporarily blocked media companies Disney, Warner Bros. Discovery and Fox since the launch of its sports streaming service, Venu, according to court documents.
The precautionary measure, granted in response to a lawsuit filed by Fubo Televisioncomes just weeks before the start of the National Football League season, and the companies had planned to launch their service around that time.
Fubo, an internet television package similar to traditional pay-TV packages, alleged in its lawsuit that Venu was anticompetitive and would negatively affect its business. Fubo shares gained 16% on Friday following news of the injunction.
“Today's ruling is a victory not only for Fubo, but also for consumers. This decision will help ensure that consumers have access to a more competitive marketplace with multiple sports streaming options,” Fubo CEO David Gandler said in a press release following the court's decision.
Warner Bros. Discovery, Fox and Disney's ESPN announced the formation of the streaming service joint venture in February. Shortly afterward, Fubo filed an antitrust lawsuit against the company.
On Friday, Fubo said it intends to move forward with its antitrust lawsuit against the companies for their anticompetitive practices. In recent months, lawmakers including Sen. Elizabeth Warren, D-Mass.; Sen. Bernie Sanders, independent of Vermont; and Rep. Joaquin Castro, D-Texas, have sent a letter pushing for a review of Venu.
“We respectfully disagree with the court's ruling and are appealing it,” Warner Bros., Discovery, Fox and Disney's ESPN said in a joint statement Friday.
“We believe Fubo's arguments are factually and legally flawed, and that Fubo has failed to demonstrate that it is legally entitled to a preliminary injunction. Venu Sports is a pro-competitive option that aims to improve consumer choice by reaching a segment of viewers not currently served by existing subscription options.”
Earlier this month, Venu announced a price of $42.99 per month.
The service would offer the full suite of live sports rights owned by the parent companies, which includes the National Basketball Association, the National Hockey League, Major League Baseball, college football and basketball, among others. Venu subscribers would also have access to 14 traditional TV sports networks from its parent companies, including ESPN, ABC, Fox, TNT and TBS, as well as the ESPN+ streaming service.
The high price is common when it comes to streaming live sports, so it does not affect any streaming deals with traditional pay-TV distributors.
In court documents, U.S. Judge Margaret Garnett noted that the three companies control about 54% of all U.S. sports rights and at least 60% of all domestically broadcast sports rights in the United States.
“There is significant evidence in the record that the actual figures may be even higher,” Garnett said in court documents.
“This means that only Disney, Fox and [Warner Bros. Discovery] “Both are major players in the live sports licensing market, competing with each other both to secure sports broadcast rights and to attract viewers to their live sports programming. But together, they are dominant,” Garnett said in his decision.
Outside of these companies, From Paramount Global CBS and from Comcast NBC is the other largest sports rights holder in the United States. Streaming services such as from Amazon Prime Video has also started offering live sports exclusively.
Traditional pay-TV distributors have been losing customers at an accelerated rate as they opt for streaming services and not opt for notoriously expensive bundles. Meanwhile, companies like Fubo (a streaming option in the bundle) have seen their prices rise due to the high programming costs associated with the networks they offer.
An advertisement for Venu Sports, the sports streaming company of Disney, Warner Bros. Discovery and Fox, hangs at the Fanatics Fest event in New York City on August 16, 2024.
Jessica Golden | CNBC
Until now, the marketing strategy around Venu had been to target sports fans outside the traditional pay-TV package.
But Fubo's lawsuit alleges that the sports streaming service violates antitrust law and is the latest example of anticompetitive behavior by the three media companies.
A multi-day hearing was held last week involving representatives from Fubo, as well as satellite TV package providers DirecTV and From EchoStar Dish, which also offers competitive internet television packages and supported Fubo in the lawsuit, argued that the streaming package would be detrimental to its business.
During the hearing, a lawyer for Warner Bros. Discovery told the judge that an injunction would “terminate” Venu, Front Office Sports reported.
“This decision is a huge win for consumers and competition in the video marketplace,” Jeff Blum, executive vice president of external and government affairs at EchoStar, said in a statement.
“We are pleased with the court's decision and believe it appropriately recognizes the potential harms of allowing major programmers to license their content to an affiliate distributor on more favorable terms than they would when licensing their content to third parties,” DirecTV said in a statement Friday.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
