A federal judge on Friday temporarily blocked the launch of Venu Sports, the forthcoming joint sports streaming venture from Warner Bros. Discovery, Disney and Fox Corporation, dealing a major blow to the effort.
The decision follows a request by Fubo, a smaller rival sports streaming service, for a preliminary injunction against the forthcoming streamer, halting its launch just weeks before the start of the NFL season.
“It appears to the Court that Fubo is likely to succeed on its claims that by entering into the [joint venture], the [joint venture] Defendants will substantially lessen competition and restrain trade in the relevant market,” US District Judge Margaret Garnett wrote Friday in the preliminary injunction order.
Fubo filed a lawsuit against the media giants in February over the planned launch of Venu Sports, arguing that the trio were attempting to leverage their sports media rights to edge out competitors, cornering the market in a single, allegedly anticompetitive bundle.
In a joint statement Friday, Disney, Fox and WBD (CNN’s parent company), said they intended to appeal the judge’s ruling.
“We respectfully disagree with the court’s ruling and are appealing it,” the companies said. “We believe that Fubo’s arguments are wrong on the facts and the law, and that Fubo has failed to prove it is legally entitled to a preliminary injunction. Venu Sports is a pro-competitive option that aims to enhance consumer choice by reaching a segment of viewers who currently are not served by existing subscription options.”
The Venu Sports service, priced at $42.99 per month, was set to offer cord-cutters access to a host of sporting events drawing from each of the media companies’ portfolios, including the NFL, NBA, MLB, NHL, tennis, soccer, golf, NASCAR races and UFC matches.
Fubo’s stock spiked more than 17% on the news Friday.
“Today’s ruling is a victory not only for Fubo but also for consumers,” Fubo co-founder and chief executive David Gandler said in a statement. “This decision will help ensure that consumers have access to a more competitive marketplace with multiple sports streaming options.”
A court date for the antitrust lawsuit has not yet been set.
Legacy media companies have been working for years to transition away from relying on the traditional cable bundle and toward profitable streaming services as millions of consumers cut the cord each year, a migration prompted by the rapid rise of Netflix.
After pouring billions of dollars into their own streaming services, the leaders of several major media companies — including Disney chief executive Bob Iger and Warner Bros. Discovery chief executive David Zaslav — have recently signaled to consumers to expect more bundling offers in hopes of simplifying options and retaining subscribers.
When the Venu partnership was unveiled in February, Iger hailed the venture as an “important step forward for the media business,” and Zaslav said the partnership “exemplifies our ability as an industry to drive innovation.” Lachlan Murdoch, chief executive of Fox Corp., said he believed the streamer “will provide passionate fans outside of the traditional bundle an array of amazing sports content.”
While WBD has put its existing live sports offerings on its Max streaming service, Disney plans to also launch a standalone direct-to-consumer ESPN streaming service next year.
“Venu was a small piece of a larger puzzle and it was just one piece of that,” a person familiar with the situation at Disney said. ESPN has “650 distributors, a flagship [streaming service] coming, and the industry is really rapidly evolving, so there could be other creative bundles or distribution platforms on the horizon.”
Oliver Darcy contributed reporting.
