When Judge Margaret Garnett granted vMVPD Fubo a preliminary injunction last week against new streaming service Venu Sports — the joint venture between Disney, Fox, and Warner Bros. Discovery — a potential cascading effect on the way live sports are distributed came to a screeching halt, at least for now.
The JV, which the proprietors argue is pro-consumer on the grounds that it provides optionality at an underserved price point, was prepared to undercut distributors like Fubo by offering a “skinny bundle” free of the bloat that drives up the price of traditional pay TV bundles. Distributors and consumers alike have expressed desire for such an offering for years, though it only became reality when the content providers were to control the distribution.
Earlier, this writer argued that the Venu bundle would have been a phenomenal value for sports fans in the short-run as the service raced to gain market share, with quite obvious risks of price-setting and anti-competitive behavior among the three companies down the line.
Now, Venu is in for a contentious legal battle or even torpedoed entirely. With Venu grounded before takeoff, where does the venture go from here?
One possibility is that one or more of the companies involved make the calculation that pursuing the legal route is not worth it and pull out of the JV entirely, essentially killing it. The most likely to do this would seemingly be Disney. The company has already announced its intentions to bring ESPN direct-to-consumer some time next year, and may not see Venu as a vital part of its strategy.
Another possibility, and the one that is being pursued publicly, is appealing the injunction in court. The three companies will likely seek emergency relief to lift the injunction. If that does not pan out, the legal fight is an uphill battle for Venu — a preliminary injunction is rarely granted unless the prosecution puts up an exceptionally strong case. As such, it’s difficult to see Venu be allowed to launch without certain provisions being met.
One such provision could be making so-called “skinny bundles” available to other distributors, not just Venu. Legal precedent does not make it easy to force companies to sell certain products if they don’t want to, though one could argue that if they are offering a “skinny bundle” to Venu, then they must offer it to other distributors too. However, such a provision would undermine the companies’ current business models.
Other provisions could revolve around the practice of bundling itself. Fubo’s current lawsuit against Venu sought to enjoin the three companies’ bundling practices altogether, though Judge Garnett wrote in her decision that any judgment on bundles as an antitrust violation would have to come in a full trial. Any requirements, however, that would restrict Venu from offering the “skinny bundle” exclusively, may well be seen as untenable for the yet-launched streamer.
As such, the injunction is certainly a setback for any sort of “re-bundling” efforts. While reasonably justified given the potential future harm Venu specifically may have had on consumers, the fragmentation and jumbled nature of live sports programming seems no closer to being solved.
It’s a difficult square to circle. Content providers inherently need to work together to bundle programming in a direct-to-consumer era. But when they do, it creates an incentive structure ripe for anti-competitive practices. Perhaps Fubo’s (and the like’s) best value proposition is as the middleman that can prevent these practices, though that provides little reason for the content providers to change what they’re doing in the first place.
It seems sports fans are no closer now to a seamless option where they can get most (or all) of their live sports in one place. That is, unless they’re willing to subscribe to cable.
