Venu Sports, the planned streaming service from Walt Disney Co., Fox Corp. and Warner Bros. Discovery, suffered a significant setback Friday when a federal judge froze the service's launch.
Rival sports streamer Fubo had challenged the joint venture, saying its formation was a violation of US antitrust laws.
U.S. District Judge Margaret Garnett appeared to agree, issuing a temporary injunction saying Fubo was likely to prevail on claims the partnership would “substantially lessen competition and restrain trade.”
The goal of the joint sports platform, announced in February, is to offer a one-stop destination that appeals to younger sports fans who are shunning traditional pay-TV subscriptions. The three traditional media companies joined forces in an effort to better compete with deep-pocketed tech companies such as Amazon Prime Video that are investing heavily to offer live sports.
Fubo CEO David Gandler called the ruling a victory for his company and its consumers.
“This decision will help ensure that consumers have access to a more competitive market with multiple sports streaming options,” it said in a statement.
Fubo filed its lawsuit in April.
The New York-based company, which launched Fubo TV nine years ago, argued that its contracts with broadcasters, including Venu's partners, forced it to offer non-sports channels it didn't want. That resulted in Fubo having to charge “high prices” to cover its licensing costs, the judge's ruling said.
If Venu were to proceed, witness testimony and evidence “firmly establish” that Fubo’s survival would be in doubt, the judge wrote.
“Fubo's bankruptcy and delisting of its shares are likely to occur soon,” Garnett wrote in his ruling. In effect, Venu would be the only option for customers who want a dedicated live sports service, he argued.
Together, Disney, Warner Bros and Fox own at least 60% of the broadcast rights to all sports in the United States, according to the ruling. The three have control over nearly 75% of the licensing rights market for the five major sports leagues, including the NBA, NFL and MLB, and 98% of professional basketball, hockey, football and baseball playoff games.
Fubo TV plans start at $32.99 per month, with more premium versions offered at $79.99 and $99.99 per month.
The company was surprised when the three media companies joined forces to create a similar platform that would be offered for $42.99 a month for sports only.
“The proposed collusive agreement will result in even higher prices and even worse conditions for third-party video distributors like Fubo, and the millions of American consumers who rely on those services,” Fubo argued in its lawsuit.
The companies, in a statement, rejected the judge's decision.
“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,” ESPN, Warner Bros. Discovery and Fox said in a joint statement. “Venu Sports is a pro-competitive option that aims to improve consumer choice by reaching a segment of viewers currently underserved by existing subscription options.”
The three companies were racing to launch the service this fall, in time for the professional football season, which begins next month.
The service was designed to bring together content from the three media giants, which have rights to the NFL, NBA, Major League Baseball, National Hockey League, major professional tennis tournaments and college sports. The companies planned to bundle Venu with their services, ESPN+, Max and Hulu.
El Segundo-based DirecTV supported Fubo TV's position in court, saying pay-TV distributors needed more flexibility to be able to offer smaller, more targeted packages to consumers.
“We are pleased with the court’s decision and believe it adequately recognizes the potential harm that can be caused by allowing major programmers to license their content to an affiliate distributor on more favorable terms than licensing their content to third parties,” DirecTV chief communications officer Jon Greer said in a statement late Friday.
Times staff writer Stephen Battaglio contributed to this report.
