Lawyers hit the headlines on Tuesday in a landmark antitrust lawsuit that Fubo filed against Disney, Fox and Warner Bros. Discovery, a case with far-reaching implications for the pay TV business.
The parties met in US District Court in Lower Manhattan following Fubo’s request for a preliminary injunction. If granted (high ground for cancellation, literally), the order would delay the planned launch of Venu Sports. The sports joint venture was announced in February, and immediately prompted a lawsuit by Fubo, which it claims will cause “irreparable harm” to its pay TV business. Fubo CEO David Gandler is set to take the stand later in the day, fresh off the company’s strong second-quarter earnings report.
Venu aggregates the feeds of 15 of the company’s networks and offers them in a package for $43 a month, less than what Fubo and other operators charge. The companies that are members of the JV said that they consider this service as an addition to the main TV package, where it will continue to license its programs. Fox CEO Lachlan Murdoch has said that his management team’s plans for Venu will attract around 5 million subscribers in its first five years of operation.
In his opening statement, Fubo attorney Mark Hansen said the company has always wanted to offer “only games” with fewer channels at a lower price. Programmers, including the trio behind Venu, have prevented them from doing so, he said. In the cart discussions he said, “They said, ‘Sure you can have some games, but you have to take a lot of other things.'” That also forces the price to go up to cover costs. more of the programming. .
Hansen noted the quarterly earnings news earlier in the day as evidence that Fubo has “a path to profitability” if it isn’t “beaten by Raptor.” (The internal code name for what became Venu Sports was Project Raptor and that name has been used in court by both sides.) Although some industry voices have derided Fubo as the “sister “the weak” will “die,” Hansen argued the opposite is true. He noted a huge run in the company’s stock in February after Venu’s announcement, however, which he cited as evidence of the threat it represents.
Disney/Fox/WBD, in response, said it was a free market and a decision in Fubo’s favor would harm consumers by preventing a new, higher-priced entrant from entering the market. Attorneys for the three companies were present, but Disney and Fox representatives gave opening arguments.
Wes Earnhardt, Disney’s attorney, weighed in on Fubo’s argument at the opening. Even if Fubo’s allegations were true (and he maintains they are not), “The Supreme Court said we’re allowed to do what it says we’re trying to do,” Earnhardt said.
“This shouldn’t be a referendum on consolidation,” he said, noting that consolidation is ubiquitous in the TV business. “If they wanted to complain about fundraising, they would have come here 40 years ago.”
James Trautman, head of media and entertainment practices at Bortz Media & Sports Group, was called as an expert witness by Fubo. The slide he created is shown in a video browser that displays prices, with subscriptions such as Netflix and Disney + on the same side at $10 to $15 per month, and Other MVPDs and vMVPDs (Comcast, YouTube TV, Fubu, etc.), $70 and up. Inside was an image of the ocean, representing the “ocean of opportunity” for Venu at $43.
The same picture of the “ocean” used by the plaintiff was changed to Trautman when he was shown an email exchange among the managers of the JV companies. The manager used the phrase “sea of opportunity” to describe the possibility of attracting customers back to the checkout area with a better price.
U.S. District Court Judge Margaret Garnett, who heard the case, appeared to reject the trend of media and technology cases being decided by magistrates with a clear time commitment. of analog. He quizzed Trautman, asked him to define the terms “cord-cutter” and “cord-never” and also stated that there are three main “buckets” of sports fans – “omnivores” who watch everything; fans of the same team and dedicated to niche sports such as golf or tennis. He spoke fluently to various pay-TV broadcasters in the market and also showed familiarity with the world of sports, talking about pro golfer Rory McIlroy and the NBA’s League Pass package.
Amid the legal wrangling, Fubo and WBD also failed to reach agreements on the sale of vehicles. Due to the confusion, all WBD stations went dark in Fubo from April 30, adding to the tension between the parties. WarnerMedia channels, before merging with Discovery in 2022 in an agreement that created WBD as a unified entity, were dark on Fubo as of 2020.
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