The Disney-FOX-Warner Bros. Discovery joint venture “Venu,” which registered high marks on the sports media Richter scale at the time of its announcement, is soon set for launch. The JV is slated to charge users $42.99 per month to stream the full compliment of sports channels operated by Disney, FOX, and WBD, including the ESPN family of networks and ESPN+, FS1 and FS2, TBS, TNT, and truTV, along with the ABC and FOX broadcast channels.
While the service itself is relatively straightforward, questions remain as to what impact Venu will have on the sports media landscape more broadly.
The first question on most people’s minds: how popular will Venu be? At a price point of $42.99, it’s a valid question. The purveyors of Venu are keeping expectations outwardly modest. Fox Corp. CEO Lachlan Murdoch told investors that Venu is targeting 5 million subscribers by 2029, though internally expectations are much higher. Details revealed from a lawsuit that vMVPD Fubo has levied against the yet-launched streaming service suggest that Venu projects a subscriber figure around 8 million at the current price point. Earlier projections from a hypothetical Disney-Fox joint venture (before WBD joined) were set as high as 19 million subscribers for a similarly priced product. That is compared to some 70 million people that currently subscribe to either a cable or satellite provider.
Despite ongoing antitrust litigation from Fubo, along with a trio of lawmakers scrutinizing the joint venture, Venu is trudging forward with plans to launch in as soon as ten days.
Given the discrepancy between the internal and external projections, one could reasonably surmise that Venu seeks to disrupt the status quo rather than simply complement the existing pay-TV landscape as it claims publicly. During a cross-examination of a Fox executive during the Fubo case, lawyers revealed that Venu expects to “attract a significant number of customers from pay TV” despite publicly claiming the service is primarily targeting “cord nevers” that are not subscribed to a traditional pay TV service. Further, internal Venu documents claim that the venture would still be profitable even if three out of four subscribers came from a pay TV service.
As such, the crux of Fubo’s case is that Venu’s supposed anti-competitive practices will cannibalize the pay TV ecosystem. Fubo cited its own internal projections suggesting they could lose between 300,000 and 400,000 subscribers to Venu. Do they have a point? Certainly. At subscription tiers ranging between $80 and $100 per month, Fubo and similar services will be undercut by a substantial margin and at risk of losing customers. Whether that is a compelling argument in a court of law is the question.
It is difficult to define exactly what value Fubo and similar services add for subscribers. In the days of peak television (when pay TV subscriptions numbered over 100 million households and streaming was still in its infancy) it was clear enough to see what distributors were actually providing their customers. Companies like DirecTV and Comcast provided a reliable means of transmission for content providers to reach consumers’ homes via the satellite or cable infrastructure they built and maintained. Nowadays, a vMVPD like Fubo uses the internet to reach customers — something the content providers can (and are) doing on their own. At most, Fubo curates a selection of programming for its viewers and can negotiate more favorable rates from content providers with scale. Less favorably, Fubo is simply a middleman that the content providers (in this case Disney, Fox, and WBD) have opted to bypass now that they have the means to distribute their own content.
Surely, Venu’s lawyers will make some version of that argument in court. On the surface, Venu’s introduction into the sports media landscape seems to be consumer friendly. If it will stay that way is the question.
At its middling price point between non-live focused streaming services like Netflix and vMVPDs like Fubo, Venu seems to offer the consumer optionality — a way to access live sports without paying for the full suite of linear channels, many of which they might not want. This is what many in the business have referred to as the “skinny bundle” and what content providers like Disney and Fox have long fought against prior to forming it themselves. For years, content providers have strong-armed distributors into including the company’s less popular channels (say, Animal Planet) in order to get the more popular, essential channels (like TNT and TBS).
The change in attitude towards the “skinny bundle” alone could be seen by some as anti-competitive. The even bigger worry, some would argue, is the possibility for price fixing in the future once a critical mass of subscribers is hit. Venu has already signaled its intention to raise prices after its first year, and the more market share the service gains the stronger its price setting power becomes.
Three prominent lawmakers believe the Department of Justice should take an interest in the joint venture. A letter signed by Sens. Bernie Sanders and Elizabeth Warren and Rep. Joaquin Castro — lawmakers with histories of scrutiny towards mergers and acquisitions — cites Disney CFO Hugh Johnson claiming Venu will distribute “over 80 percent of the national games that are currently broadcast.” While that number may be misleading given that the ESPN family of networks airs a substantial amount of less-popular sporting events “nationally” due to the many networks they program compared to the media companies not included in Venu, it nonetheless puts into perspective just how much content the Venu trio controls. There is certainly an argument to be made that the three companies within the joint venture will be disincentivized toward competing with one another for sports rights in the future, especially if Venu becomes widely adopted.
On the other hand, Venu seems like a phenomenal deal for consumers, now. For $42.99 per month subscribers will gain access to ABC, ESPN, ESPN+, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, FOX, FS1, FS2, BTN, TNT, TBS, and truTV. If supplemented with a free antenna that gives access to CBS and NBC, a Venu subscriber could watch all NFL games other than Amazon’s “Thursday Night Football” and some one-off streaming exclusives, all nationally televised NBA games other than NBA TV (until the new deals start in 2025), all nationally televised MLB games aside from Apple TV, all nationally televised NHL games, all nationally televised college football games other than CBSSN and Peacock, and men’s and women’s March Madness all for around half the price of a normal vMVPD.
The Venu trio did not just come together by chance. It’s no coincidence that the two major providers of live sports in the United States not included in Venu are Comcast (NBC) and Paramount (CBS). These two companies began offering premium live sports properties, such as the NFL, on their own direct-to-consumer streaming services at considerably low rates in an effort to gain market share, undermining the value of the traditional pay TV bundle and essentially leaving the three Venu companies stranded to keep the still wildly-profitable bundle in tact. Disney and Fox have notably not taken their linear offerings direct-to-consumer before Venu. WBD has a direct-to-consumer option, but only through an add-on to Max.
The conventional wisdom about Venu following its launch was mostly “wait and see.” Wait to know how the service will be priced, and see the response among key stakeholders such as the distributors and the government. Now, after the price is known and considerable actions have been taken from Venu competitors as well as lawmakers, the nascent streamer’s future remains just as uncertain.
From a consumer standpoint, it’s hard to argue there’s a better deal out there. If one can look past the lack of regional sports networks (a big if for some sports fans), Venu in conjunction with an antenna offers just about everything one could need. Even adding Peacock and Paramount+ subscriptions to the Venu price would clock in well below a cable subscription. The rightful concern, however, is whether this can last.
Should Venu’s projections be accurate that they need just one out of every four subscribers to be a “cord never,” that still means 25% of subscribers need to be brand new to the pay TV ecosystem for this venture to work financially. That’s not necessarily easy when many subscribers will likely be cord cutters.
Add to this the barrage of legal challenges the service is facing, and the future becomes much more dicey. While Venu is in its infancy, the pro-consumer public narrative will likely hold true. However, if Venu ever receives widespread adoption, the host of legal arguments will carry much more water, and it will more likely harm consumers. Nonetheless, Venu marks a critical first step towards remaking something akin to the old cable bundle. Consumers want choice, but they also want simplicity — all their sports in one place for one price. No matter how Venu fares, it’s likely the venture will get us one step closer to that end.
