By JOE REEDY AP Sports Writer
With the U.S. Open tennis tournament beginning Monday and college football kicking into high gear, this was supposed to be the week when some expected the Venu Sports streaming service to have a soft launch at least.
Instead, the joint venture between ESPN, Fox, and Warner Bros. Discovery has been sidelined by a federal court’s preliminary injunction, and its future is very much up in the air.
The Aug. 16 ruling by United States District Judge Margaret M. Garnett that Fubo was likely to be successful in proving that the joint venture would violate antitrust laws put the brakes on what was an ambitious timeline to get Venu Sports up and running. ESPN, Fox, Warner Bros. Discovery and Hulu announced their plans to offer a sports streaming service on Feb. 6. They immediately got questions from competitors and sports leagues on how it would work.
Irwin Kishner, co-chair of the Sports Law Group with New York law firm Herrick, said getting the service up and running in less than seven months would be a tall order.
“You can certainly put a deadline to try to get things going. But, I think that was somewhat aspirational as opposed to likely,” Kishner said.
Garnett has scheduled a pretrial conference for Sept. 12. According to a memo Garnett sent to both parties on Monday, if the case goes to trial, the earliest it would begin is late February.
Kishner said he wasn’t surprised about the ruling given the Biden Administration’s priority on antitrust matters.
“Having three of the biggest providers of sports content in one equity, you can certainly make a colorful argument that might thwart competition,” Kishner said.
Venu Sports would include offerings from 14 linear networks — ESPN, ESPN2, ESPNU, SEC Network, ACC Network, ESPNEWS, ABC, FOX, FS1, FS2, Big Ten Network, TNT, TBS, truTV — as well as ESPN+.
Before the case goes to trial, though, streaming companies and cable and satellite providers hope the ruling will advance discussions regarding how media companies sell their content. Will it continue to be bundling — where if a consumer wants to get ESPN, they often have to subscribe to a package that includes Disney Channel, Freeform, FX and National Geographic — or will there eventually be a day when a viewer can subscribe to ESPN only?
DirecTV chief content officer Rob Thun said in a letter to subscribers last week that collaboration between programmers and distributors will be necessary to reverse the tide of cord cutting.
“We agree with Venu’s shrouded market-sizing estimates that were unearthed during the trial that recognize an ‘ocean of opportunity’ to offer consumers skinnier packages. However, we disagree with Venu’s anti-competitive strategy and believe that TV distributors should have the same flexibility to thrive alongside (direct-to-consumer) services by offering genre-based packages that extend beyond sports to include locals, entertainment, news, family, movies, and others,” Thun wrote.
It is debatable whether bundling or a la carte offerings offer the greatest savings. For example, Venu Sports announced on Aug. 1 that it would be available for $42.99 per month. The lowest-priced tiers of Paramount+ and Peacock would be a combined $14 per month.
Recent spats between cable companies and networks over distribution agreements have also centered recently on companies trying to get the networks to include direct-to-consumer offerings in the agreements.
In last year’s agreement between Charter Communications and Walt Disney Company, Disney included the Disney+ Basic ad-supported offering, ESPN+ and ESPN’s future direct-to-consumer service to customers of certain Spectrum TV packages.
Anthony Palomba, a professor of business administration at the University of Virginia’s Darden School of Business, noted that networks are competing not only against themselves but also with other streaming companies, TikTok, YouTube and Twitch for attention, especially among younger consumers.
“The problem with the media industry is that, with more competition, there may be a drive to push down prices … but because these firms are competing with user-generated content firms, this creates a really difficult dynamic for them to navigate,” Palomba said. “How do you create further competition against these firms? By spending more? Getting more celebrities? People continue to be drawn to user-generated content regardless of these tactics. Until this issue is resolved, I believe you’ll see further attempts at consolidation and bundling across the media and entertainment sectors.”
The Fubo/Venu case is one of many high-profile court proceedings involving major media deals.
Warner Bros. Discovery has sued the NBA for not accepting its matching offer for one of the packages in the league’s upcoming 11-year media rights deal. The league filed a motion in New York state court in Manhattan last week to have the case dismissed.
Attorneys representing “NFL Sunday Ticket” subscribers are expected to appeal to the U.S. 9th Circuit Court of Appeals a judge’s decision to overturn a jury’s $4.7 billion verdict in the class-action lawsuit against the NFL. It will be the second time since the case started in 2015 that it has gone to the 9th Circuit.
Diamond Sports — which owns 18 networks under the Bally Sports banner — has been in Chapter 11 bankruptcy proceedings in the Southern District of Texas since it filed for protection in March 2023. Diamond, though, is inching closer to having its financial affairs in order, including finalizing deals to continue carrying games for 22 NBA and NHL teams.