Late last month, the antitrust division of the U.S. Justice Department, along with attorney generals from 16 states, sent an amicus brief in support of a New York district court’s preliminary injunction of Venu Sports.
However, the daunting legal pile-on currently being faced by the Disney, Fox and Warner Bros. Discovery joint venture shouldn’t decide its fate, wrote Lightshed Partners equity analysts Rich Greenfield, Brandon Ross and Mark Kelley in a joint blog posting for investors last week. (Paywall warning in full effect here.)
“The only reason Venu is being sued in the first place is that Venu-like bundles have not been offered to third-party distributors. There would be no reason for a Fubo/Venu lawsuit if every MVPD/vMVPD could offer more customized bundles,” the analysts added.
In case you’ve been sleeping on one of the biggest media stories of 2024, Disney, Fox and WBD pooled their linear sports channels, including ESPN and FS1, and were preparing to launch them over the fall in a live-streamed bundle package priced at $43 a month.
But sports-focused virtual pay TV operator Fubo — which claims it has been denied for years by these same programmers the same flexibility to create genre-specific skinny bundles — sued the JV over antitrust issues and successfully obtained a rare preliminary injunction back in August.
In their subsequent appeal, Venu’s backers argued that programmers like themselves are “caught in a perfect storm” of rising content costs and declining revenue due to increased competition, including lower affiliate fees and advertising revenue as cord-cutting pulls more consumers out of the traditional pay TV ecosystem.
“To weather this storm, programmers have taken steps to diversify their distribution methods,” the Venu programmers added.
A trial hearing in the Venu case is scheduled for October 6, 2025.
With NBCUniversal spinning off its struggling cable networks, and Paramount Global, Disney and WBD either also considering doing the same thing, or being pressured to do so by their investors, Lightshed analysts suggest the moment may have arrived for programmers to enable all pay TV operators the ability to offer smaller and more customized bundles, as Venu itself seeks to deliver through a direct-to-consumer streaming model.
“Maybe it is time to rip the proverbial band-aid off, enable smaller bundles across all MVPDs/vMVPDs, and drastically reduce or eliminate the minimum penetration requirements and MFNs [most favored nation clauses] that hamstring innovation across the industry,” wrote Lightshed.
Indeed, the future of the big pay TV bundle is “grim at best,” and the outlook in particular for “non-sports, non-core networks” such as TLC, Disney Channel, MTV and USA Network is perhaps more so in the scenario of unbundling for smaller packages, the analysts explained. But if Fubo’s suit pushes the pay TV industry to reimagine its bundles into smaller offerings that consumers actually want, it will have been good for business and the industry overall.
“While we have never believed Fubo is a good business idea and question its viability regardless of whether it wins the Venu lawsuit, pushing the industry toward smaller bundles that are not encumbered by onerous MFNs and minimum penetration rates that go well beyond Venu could be a long-term positive for programmers, distributors and most importantly, consumers,” they added.