President Joe Biden’s Department of Justice and New York Attorney General Letitia James, along with Democratic attorneys’ general of 15 other states and the District of Columbia, argue in new court filings that Walt Disney, ESPN, Fox, Warner Bros. Discovery and Hulu’s plan to launch sports-centric streaming platform Venu Sports should be rejected.
The DOJ and AGs filed amicus briefs with the U.S. Court of Appeals for the Second Circuit on Tuesday urging the court to affirm U.S. District Judge Margaret M. Garnett’s granting of a preliminary injunction to FuboTV in August. Unless vacated by the Second Circuit or lifted via an out-of-court settlement, the injunction will remain in place at least until a trial, which likely won’t occur until 2025 or later, and will block Venu Sports’ release.
Garnett found Venu Sports problematic under antitrust law, since it involves competitors joining hands to place their live sports content on one platform. Although the live sports content on Venu Sports would be nonexclusive, and Venu Sports would lack CBS, NBC, CNN, Fox News and other sports and non-sports networks, the $42.99/month platform could put Fubo—which has been denied the chance to offer a skinny live sports bundle—out of business.
Also problematic was the defendants agreeing to “steer clear” of investing in similar streaming platforms and hatching a non-compete agreement that would help to keep Venu Sports a unique product.
In its brief, the DOJ underscored the “dominant” status of the defendant companies in the broadcasting of live sports. The DOJ says the defendants collectively control about 54% of U.S. sports rights and more than 60% of nationally-broadcast sports right. The DOJ reasons that Venu would grant the defendants even greater dominance in distributing sports-focused TV content to consumers.
In addition, the DOJ stressed Garnett finding “overwhelming” evidence that Venu would bring about “anticompetitive effects,” because the defendants have agreed to “steer clear of a [Venu]-like platform” and face diminished incentives “to cooperate with a rival sports-focused product or to launch their own such products.”
Along those same lines, the DOJ worries about Venu empowering the defendants “to impose price increases and bundling requirements on rival distributors.”
James and her colleagues enunciate similar points in their amicus brief. The brief takes aim at the defendants requiring Fubo and other distributors “to obtain licenses for bundles of content, including non-sports content.”
They also question why Fubo would be required to “distribute and pay affiliate fees for the Disney Channel” to obtain a license for ESPN “even if Fubo’s sports-focused subscribers do not want the Disney Channel and would prefer to purchase sports-only products that could be offered at lower prices than the bundled products.”
James also takes issue with the defendants’ argument that they have no duty under the law to offer Fubo the chance to deliver a skinny live sports bundle or any terms. James says that a no-duty-to-deal defense “is applicable only to a defendant’s unilateral dealings with others” and does not insulate a joint venture like Venu Sports from antitrust scrutiny.
Other AGs have a different take on these antitrust issues. In September, the Republican attorneys’ general of six states (Florida, Alabama, Iowa, Kentucky, Mississippi and South Carolina) filed an amicus brief arguing that Garnett and Fubo are wrong about the law. They insist that Venu Sports, by offering a lower-cost alternative for “price-conscious sports fans who have dropped out of, or never been part of, the traditional TV ecosystem,” would promote competition in the marketplace. The AGs also agree with the defendants that they have no legal duty to offer the same terms to Fubo.
Similarly, former Federal Trade Commission commissioner Joshua Wright has written on his Substack, Competition on the Merits, that “every once in a while, there comes along an antitrust decision so poorly reasoned and detached from existing law that it is difficult to fathom. Judge Garnett’s decision in FuboTV v. Disney et al is, ladies and gentlemen, exactly such a decision.”
Wright, an economist and antitrust attorney, questioned why Garnett would issue an injunction when the judge acknowledged, as Wright put it, “that Venu TV would increase competition and benefit consumers.”
Whether the dueling briefs by the Democratic and Republican AGs influence the Second Circuit remains to be seen. One interesting factor is timing. Appeals can take a while to play out. It stands to reason that after President-elect Donald Trump is inaugurated on Jan. 20, his DOJ might submit an amicus brief more in line with the views of Republican AGs—perhaps especially so given the animosity between Trump and James, whose office has sued Trump for fraud.
In the meantime, sports fans wait on the chance to buy a skinny live sports bundle.
(This story has been updated to correct the name of Joshua Wright’s newsletter, referenced in the 12th paragraph.)
