By Dawn Chmielewski
(Reuters) – Three major media companies will ask the U.S. Court of Appeals on Monday to reverse a ruling that blocked the launch of their Venu Sports streaming service, arguing that a district court judge was wrong to halt its planned debut on antitrust grounds.
Walt Disney (NYSE:DIS), Fox and Warner Bros Discovery (NASDAQ:WBD) argue that the lower court’s decision denies consumers access to a new, lower-cost service designed to appeal to price-conscious sports fans who have dropped out of the traditional TV ecosystem or never subscribed in the first place.
Rival sports streaming service FuboTV (NYSE:FUBO) sued the big media companies last February, saying Venu Sports would violate U.S. antitrust law by reducing competition and driving up prices. A district court judge found that Fubo is likely to succeed in its antitrust claims, and issued the injunction temporarily barring Venu’s launch.
“The district court’s injunction forecloses competitive entry, decreases consumer choice and denies consumers lower prices—all with the effect of shielding Fubo from competition,” the media companies argued in a Dec. 9 court filing. “The decision should be reversed.”
At issue is a practice known as bundling, in which the media companies require distributors like Fubo to carry a package of programming, including less desirable channels, to gain access to valuable live sports.
Fubo said “forced bundling” prevented it from offering a sports-centric service — an exception the media companies made for their own joint-venture, Venu Sports.
The Justice Department, New York, Illinois, California and other states urged the 2nd U.S. Circuit Court of Appeals to uphold the preliminary injunction.
In its supporting brief, the Justice Department cited the district court’s findings that restrictions on competition among the joint-venture partners would effectively prevent other sports-only services from emerging. That would grant the media companies — who collectively control about 54% of U.S. sports rights — dominance in distributing sports-focused TV packages to consumers, the Justice Department wrote.
“The district court found that (the media companies) were less likely, after forming Venu, to unbundle that content for other distributors like Fubo wishing to create their own sports-centric offerings,” the Justice Department wrote. “This foreclosure would harm competition in the live pay TV market.”