Venu Sports, the joint sports streaming venture backed by Disney, Fox Corp. and Warner Bros. Discovery, has laid out its case to a federal appeals court, requesting permission to resume its plans to launch.
The company’s brief, filed late Friday in the U.S. Court of Appeals for the Second Circuit, comes months after pay-TV operator Fubo filed an antitrust lawsuit accusing the media giants of mounting Venu as a way to put Fubo and other distributors out of business. Last month, a judge in New York stunned the media business by siding with Fubo, granting its request for a preliminary injunction barring Venu’s from proceeding with its debut.
“Programmers are caught in a perfect storm: content costs are rising while revenue is shrinking, both due to increased competition,” Venu said in the brief. “To weather this storm, programmers have taken steps to diversify their distribution methods.” (Read the full brief HERE.)
The appeal mainly concerns the injunction and Venu’s ability to begin operating as a commercial entity. The underlying lawsuit, however, has broader implications. Venu stakeholders, and by extension Comcast/NBCUniversal, Paramount Global and other programmers, face potentially damaging legal exposure as they continue to juggle streaming with legacy linear businesses beset by secular decline.
Fubo has until November 4 to file its response to Venu’s appellate brief.
Venu argues that U.S. District Court Judge Margaret Garnett’s ruling “denies consumers a new, lower-cost, innovative product—so as to protect Fubo from increased competition. That is the opposite of what the antitrust laws seek to achieve.”
By offering 16 linear networks from Disney, Fox and WBD for $43 a month, Venu would “increase output and lower prices,” the brief maintains. “Fubo (a competitor) might not like that, but consumers would.”
Venu contends that it is merely “another way defendants are trying to combat steep declines in the number of MVPD subscribers by diversifying the manner in which their networks are distributed to consumers.” Because cord-cutters and cord-nevers, especially younger customers, are the target for Venu, the service would be complementary to the main pay bundle, the brief adds.
Fubo asserted in its complaint and in testimony at the district court that it had made several attempts to launch a Venu-like, sports-focused bundle over the years but was repeatedly rebuffed by Disney, Fox and WBD. Forced to carry additional, non-sports networks, Fubo raised prices to nearly double the $43 initial cost of Venu. In its carriage fight with Disney earlier this month, DirecTV cited the Fubo complaint and filed an amicus brief in support of the pay-TV distributor. Sling TV parent Dish Network also filed an amicus brief.
Addressing Garnett’s ruling specifically, Venu argues that it “never defined what products would qualify for its ‘skinny sports bundle segment.’ Nor did the district court explain why certain products available to consumers today—such as various SlingTV sports packages—would be excluded from its skinny sports bundle segment. Despite those failings, the district court rested its injunction on the conclusion that Venu would “monopolize” this market segment. But without defining a relevant antitrust market, a court cannot reach any conclusion about whether or not Venu would monopolize anything, or properly assess whether a defendant’s conduct would pose any harm to competition.”
