Just a few days after Disney disclosed plans to buy out virtual pay TV company Fubo, settling an antitrust lawsuit and lifting a corresponding preliminary injunction against the media company’s Venu Sports joint venture in the process, satellite TV companies DirecTV and Echostar pushed back - and hinted that they might take legal action against Venu on their own. *Update: Despite the settlement, on Friday ESPN announced the Venu JV partners, including Fox and Warner Bros. Discovery, collectively decided to cancel plans to launch the Venu streaming service.
In separate letters to the New York federal judge overseeing the case, DirecTV and Dish Network-parent Echostar argued that just because Disney, with help from JV partners Fox and Warner Bros. Discovery, paid $220 million to settle Fubo’s suit, it doesn’t mean the underlying antitrust claim isn’t valid.
“The defendants can’t purchase their way out of the antitrust violations,” said DirecTV’s letter to Judge Margaret Garnett for the Southern District of New York.
“Now, with the injunction undone by voluntary dismissal, Dish, Sling, and other distributors will suffer antitrust injury,” read Echostar’s letter. “Their services will be hampered by the massive incentive that the JV defendants have to raise programming fees for distributors that compete against Venu, and they will be effectively foreclosed from competing.”
Both DirecTV and Echostar filed affidavits last spring supporting Fubo’s antitrust suit, which yielded a rare preliminary injunction against Venu Sports in August. With the legal precedent already established, it’s no leap to imagine that the satellite pay TV provider might take legal action themselves.
“We continue to evaluate all available avenues to protect competition and our customers,” DirecTV said in a statement emailed to StreamTV Insider.
Disney, Fox and WBD roiled the pay TV industry when they announced a $43-a-month service packaging the media companies’ respective linear sports channels, which include ESPN, Fox Sports 1 and TNT.
Pay TV operators, who pleaded in vain with these same media companies for years for similar licensing rights needed to create similarly skinnier, genre-based bundles like Venu Sports, cried foul. But it was Fubo that actually filed a suit - and won the surprise injunction, delaying the JV’s plans to launch back in September. The case was scheduled to start a trial hearing this October.
Instead, this week Disney announced plans to merge the virtual MVPD business of its Hulu streaming service, Hulu + Live TV, with Fubo’s vMVPD business in a standalone entity that Disney owns 70% of. In addition to the $220 million settlement, Disney is also extendeding a $145 million loan to Fubo.
Heavily indebted, Fubo has now managed to leverage its legal battle into a lifeline, adding Hulu + Live TV’s 4.4 million subscribers to its existing base of 1.613 customers (as of the end of Q3).
But while Fubo may be on a more solid footing, DirecTV, Dish and the rest of the U.S. pay TV operators must wrestle with a fundamental business disadvantage — where some programmers appear unwilling to extend the same kind of favorable terms they give themselves.
“This settlement clears the path for Venu to launch unencumbered by removing the injunction the court imposed to preliminarily prevent the immediate and irreparable harms the JV launch presents,” DirecTV told Garnett. “DirecTV is just one of several non-parties that expressed ‘grave concerns’ about the impact Venu would have on competition for sports programming, given that Venu would ‘offer content in a manner that [the defendants] do not allow DirecTV or other distributors to offer to consumers.”