A new Disney streaming platform is being shut down after a federal court ruled against a new potential sports monopoly, putting the stability of subscriber prices and consumer options at enormous risk.
“American Consumers Do Not Have to Simply Take Their Word for It”
Earlier this month, U.S. District Judge Margaret Garnett granted FuboTV, a sports streaming TV service, a preliminary injunction against the combined forces of The Walt Disney Company, Warner Bros. Discovery, and Fox.
FuboTV has filed a billion-dollar anti-trust lawsuit against the three massive media corporations, claiming that their announced Venu Sports service would fundamentally be an anti-competitive, industry-dominating force that would crush independent outlets. It is hard to argue against that, and it appears that Disney’s attorneys didn’t do a good job of it.
FuboTV’s case against Disney, Warner, and Fox is a case of David versus Goliath to an almost comical degree; three of the world’s most powerful corporations, which collectively own ESPN, Fox Sports, and TNT Sports, against a niche streaming service with under two million subscribers.
However, David had some good lawyers because Judge Garnett has ordered Venu Sports to halt any further development until the antitrust lawsuit can be examined, essentially stopping Disney and its partners in their tracks.
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In her ruling, Judge Garnett said:
“Once [Venu Sports] launches, the [Disney, Warner, and Fox] have no reason to take actions that could allow for the emergence of direct competitors. Quite the opposite: the multi-year monopolistic runway they have created for themselves will provide powerful incentives to thwart competition and hike prices on both consumers and other distributors. But even if the [joint venture] defendants swear that such price-hiking and competition excluding will not actually occur (though, as discussed below, there is good reason to believe that it will), one purpose of antitrust injunctions is to prevent anticompetitive incentives from forming in the first place so that American consumers do not have to simply take their word for it and hope for the best.”
Thus, they are “hereby ENJOINED and RESTRAINED from launching [Venu Sports] pending final adjudication of the merits of this case or further order of the Court.” In briefer terms, Venu is dead for now, because corporations can’t be trusted.
What does this mean for sports fans and, more importantly, streaming subscribers at large? Primarily, it means that Disney, Warner, and Fox are all freaking out right now because Venu Sports is a key element in all three companies’ strategy to finally make streaming content profitable. And if they can’t get that to happen, there is only one inevitable outcome: executive salaries and bonuses will be cut to keep the company in the black.
Just kidding! It means (in all probability) that Disney will keep raising prices for Disney+, Hulu, and ESPN+, its existing streaming services in an attempt to cover up that the first two platforms have lost billions of dollars of shareholder value.
At this point, it is clear that all of the major media companies (plus Chick-fil-A, for some reason) dived headfirst into the streaming wars out of FOMO rather than having a long-term strategy for profitability. Virtually every major streaming service, from Disney+ to Max to Apple TV+, runs at a major loss for its parent company, diminishing revenue for theatrical releases and decimating the once-mighty sales of DVDs.
Despite trying to retroactively stuff its services full of ads, removing content to avoid paying creator royalties, and trying to turn Disney+ into some kind of all-in-one shopping experience, the Mouse has been promising shareholders that streaming will make them a lot of money for years, and it has always been “end of the fiscal year” or “maybe the next one” or “does it count if ESPN bails us out?”
Venu Sports was an attempt by Disney, Warner, and Fox, which are mutually locked in competition over the very lucrative and confusing world of broadcast sports, to team up and dominate everyone else. Since they are currently shut out of that, the trio is going to have to make up that potential income elsewhere, which always means on the consumer end.
Disney+ Streaming: No Way Out
As one might expect, Disney and company are not happy about Judge Garnett’s ruling. The trio issued a joint statement, saying, “We believe that Fubo’s arguments are wrong on the facts and the law and that Fubo has failed to prove it is legally entitled to a preliminary injunction.
Venu Sports is a pro-competitive option that aims to enhance consumer choice by reaching a segment of viewers who currently are not served by existing subscription options.”
It’s nice that Disney believes that, but, in actual fact, FuboTV proved its entitlement to a judgment to the satisfaction of a federal court, which is what matters. Unsurprisingly, Disney, Warner, and Fox are pushing for an immediate appeal, basically on the grounds that they already spent a lot of money, and it would be unfair not to let them launch Venu (per Variety).
The filing was made in the U.S. Court of Appeals for the Second Circuit and states:
“[Disney, Warner, and Fox] are losing tens of millions of dollars that they have invested in a start-up business that has been blocked from coming to market, dozens of employees who were hired to work for Venu are left in limbo, and consumers are denied access to the innovative new product that Venu would have provided and the increased competition that would result from a new product offering.”
It is a bold strategy to claim that a federal injunction should be lifted because you’ve already spent an estimated $74 million to create a (probably) monopoly over the sports streaming industry, and you really want consumers to subscribe to it. But that it basically what’s happening right now.
Though the companies are also claiming that consumers desperately need access to Venu and “increased competition,” it is worth noting that it has already been announced that the service will cost $42.99 a month.
That’s on the high end of the sports steaming spectrum, but it is “consistent with Venu’s proposition to bring linear feeds of 14 sports-centric networks to consumers without a full pay-TV subscription.”
Warner Bros. Discovery CEO and president of global streaming and games JB Perrette has previously noted (in a surprising display of candor) that the point of rival companies teaming up to provide bundles isn’t really to lower costs but to make consumers feel good about spending more.
Perrette said, “Even if they don’t use a service in one month, [consumers] still feel like they’re getting great value and they might use it the next month, and so it’s got a lot of rationale by pulling these together and makes us all be able to go back to investing in the areas that we really are great at.”
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Should the appeal go through, it is probable that Venu Sports will be launched ASAP to provide a basis that it shouldn’t be shut down in the future, since it’s already up and running.
On the other hand, FuboTV co-founder and CEO David Gandler called his war against Venu “a duel to the death. It has been when we started this company. We are fighting for consumers,” so he’s unlikely to give up any time soon.
Of the three principals behind Venu, Disney has been taking the biggest swings in recent months to try to turn things around for streaming profits. It recently announced that it was shutting down free streaming apps in order to get people to sign up for Disney+ and Hulu, has doubled the cost of its flagship service since its launch, and is even willing to sell off valuable channels to make its deals work.
Disney has a lot invested in steaming, and it can’t afford to stop now. Even if it’s going against the courts.
What sports streaming services do you subscribe to?