Justice Department asked to investigate joint venture between Disney, Fox and Warner Bros.
Senators Elizabeth Warren and Bernie Sanders and Representative Joaquin Castro have sent a letter to the Justice Department asking it to investigate and possibly prevent Disney, Fox and Warner Bros. from launching a joint venture that would combine the assets of ESPN, Fox Sports and TNT Sports into a direct-to-consumer streaming service called Venu Sports.
In the letter, obtained by The AthleticsThe three Democrats urged the Justice Department to investigate Venu Sports “and oppose it if it violates the antitrust or telecommunications laws or regulations.” They also believe that the fact that Venu is described as a joint venture should not prevent it from being investigated.
Venu Sports is slated to launch soon at $42.99 per month. Subscribers won’t need a cable subscription and will be able to access all the programming and games from all three networks and their affiliates (such as ABC and Fox), plus ESPN+, the network’s additional direct-to-consumer service that will feature more niche sports.
ESPN has plans to make its network available directly to consumers as a standalone product next year, which The Athletics has previously reported that the cost is expected to be $25-30 per month.
Viewers can currently subscribe to services like YouTube TV for around $70-$75, which includes all three networks plus the other major broadcasters, NBC and CBS. Both networks also have their own direct-to-consumer streaming products.
Fox CEO Lachlan Murdoch reiterated during his company’s earnings call this week that he expects Venu Sports to have 5 million subscribers by 2029. While the deal is between the trio, Venu Sports’ subscription revenue is based on the same formula the networks receive from cable and satellite providers. ESPN, which earns more than $10 per cable subscriber, is expected to receive the largest share of Venu Sports’ revenue.
A spokesperson for Venu Sports declined to comment.
In the letter from Senators Warren and Sanders and Representative Castro, the trio raised “serious” concerns about Venu Sports, saying it “is poised to control more than 80 percent of nationally televised sports and half of all national sports content, putting it in a position to exercise monopoly power over televised sports. The market power of its three giant parent companies would allow it to discriminate against competitors and raise prices for consumers.”
Venu Sports is already facing a legal challenge from Fubo, a direct-to-consumer provider that carries ESPN and Fox Sports but not TNT. Fubo is seeking a preliminary injunction in Manhattan to halt the service before it begins.
The senators and congressmen appear to agree with Fubo’s premise that ESPN, Fox Sports and TNT don’t offer other platforms the opportunity to combine the trio, noting that Disney, ESPN’s parent company, often bundles its “other non-critical, low-demand channels and requires competing sports streaming platforms to purchase and air the entire package in order to gain access to ESPN.” The letter also argues that the joint venture violates the goals of the FCC’s National Ownership cap, which limits any one station from reaching more than 39 percent of television households.
One of ESPN’s counterarguments was that it was in about 100 million homes in 2011 and is now in 66.5 million homes, according to the latest Nielsen figures. It needs to find new customers who are either canceling their cable subscriptions or have never had cable or cable-like offerings before, so it’s pushing multiple price points that range from $25 to $75 a month. Fox Sports has no other paid streaming service, while TNT Sports is part of the Max platform, which offers HBO, among other services.
The letter concludes that the Department of Justice and the FCC should closely review this transaction and take immediate action to block it if it violates antitrust law or is not in the public interest, convenience, and necessity.
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(Photo: Jim Watson/AFP via Getty Images)
