The “sports-first” cable TV replacement product that sees FOX Corporation, Warner Bros. Discovery and ESPN parent The Walt Disney Company teaming up to create Venu Sports has received a significant setback, courtesy of a Federal District Court in New York.
In an Opinion and Order released on Friday, District Judge Margaret Garnett ordered the joint venture participants from launching the forthcoming OTT platform pending the court’s final ruling.
It’s a win for “sports first” vMVPD Fubo, which has vigorously fought against the creation of a “Hulu for Sports” by the three media giants for months.
“The underlying motives and implication of this joint venture also command our scrutiny,” the company said on February 7. Then came the February 20 filing of an antitrust lawsuit in a New York federal district court against FOX Corp., WBD and Disney — a move that was designed to put a stop to its plans.
This appears to have been successful, with a planned fall debut for Venu now in question.
Garnett issued a 69-page order granting Fubo’s motion. Citing a Columbia Pictures Indus. Inc. case, she declared, “Because the parties should be able to litigate this crucial issue on a full and fair record, and because doing so requires the preservation of the status quo, the Court, having considered and weighed all competing interests before it, finds that ‘[a]ny doubt concerning the necessity of the safeguarding of the public interest should be resolved by the granting of a preliminary injunction.'”
She also centers on testimony from Big Ten Conference Commissioner Tony Petitti, ruling that “nothing” he said under oath “suggests that the JV will be pro-competitive.” She noted, “Petitti’s testimony was that the Big Ten cares predominantly about increasing viewership of its content, regardless of the source of those viewers, and his support for the JV was premised on the assumption that it might be another place for sports fans to find Big Ten sporting events.”
The judge also pointed to the views of Dish and DirecTV, who have also spoken out against the creation of Venu Sports as anti-competitive. DirecTV Head of Communications and Community Jon Greer cheered Garnett’s ruling. “We are pleased with the court decision and believe that it appropriately recognizes the potential harms of allowing major programmers to license their content to an affiliated distributor on more favorable terms than they license their content to third parties,” she said.
Garnett also dismissed the claims by FOX, Disney and WBD that Fubo’s harms are not the result of the JV but are instead the consequences of Fubo’s status as a “weak competitor.”
She said, “Fubo need not show it will achieve any particular metric of extraordinary success absent the JV, so long as it can show that it would be a going concern absent the launch and likely will not be one for long following the launch. The record is clear that the causal engine of Fubo’s predicted demise is the launch of the JV, and an injunction must therefore issue because “[i]t is well settled in this circuit that [m]ajor disruption of a business can be as harmful as termination[.]”
‘A VICTORY FOR CONSUMERS’
In a statement distributed at 4pm Eastern by Fubo, co-founder and CEO David Gandler commented, “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.”
That said, the battle between Venu Sports and Fubo is not over.
“Fubo has said all along that we seek equal treatment from these media giants, and a level playing field in our industry,” Gandler said. “The proposed joint venture was only the latest example of anticompetitive practices that The Walt Disney Company, FOX Corp. and Warner Bros. Discovery have consistently engaged in for many years. We believe these practices monopolize the market, stifle competition and cheat consumers from deserved choice. A fair and competitive marketplace is necessary to provide consumers with multiple, robust and more affordable sports streaming options. We will continue to fight for fairness and for what’s best for consumers.”
A court date for the antitrust lawsuit has not yet been announced.
Kellogg Hansen represented Fubo in its legal proceedings.
