Venu Fallout: Disney Hit With Antitrust Lawsuit From Fubo Subscriber

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Following Disney‘s decision to shut down their sports-centric streaming platform Venu, they are now facing a lawsuit accusing them of potential antitrust infractions due to their double role as both a content provider and distributor in their commercial transactions.

A Fubo subscriber has filed a class action lawsuit in a New York federal court on Tuesday, arguing that because Disney owns ESPN, they can charge inflated prices (or “extract monopoly rents”) in the streaming live TV market. The argument is that services are forced to offer non-ESPN content if they want access to the sports channel, which must be included in the most affordable package for consumers.

The argument in this case suggests that unfair practices used by Disney against its Hulu platform are limiting competition from other players in the Streaming Live TV (SLTV) market, thereby causing providers like Fubo to raise their prices for consumers more than they would in a fair and open market environment.

On Friday, Disney, Warner Bros. Discovery, and Fox Corp. announced that the Venu project would not proceed further. This decision came shortly after Disney revealed plans to merge its Hulu + Live TV service with competitor Fubo, creating a streaming Multi-channel Video Programming Distributor (MVPD) that will be second only to YouTube TV in size.

However, by this stage, Disney’s bundling rules were no longer considered legal. In fact, the court had already issued an order halting the release of Venu, arguing that bundling was consistently and systematically applied to every live pay TV distributor except for the joint venture. This exception made it impossible for any other distributor to offer a multi-channel sports-focused streaming service.

Fubo’s case primarily focused on claims that companies like Disney, Fox, and Warners use their ownership of must-watch sports as a means to compel competitors to offer numerous expensive and unpopular channels as an obligatory condition of licensing crucial sports networks. This alleged anticompetitive packaging, it contended, results in higher costs for consumers because they are essentially forced to pay for content that they don’t consume.

On Tuesday, Fubo’s lawsuit expands upon its claims against Disney. It accuses Disney of using anticompetitive practices by requiring rivals to include ESPN in their most affordable packages and implementing “most favored nation” clauses. These clauses establish that the fees for ESPN affiliates negotiated with any competitor set an industry-wide minimum price.

According to the complaint, Disney’s unfair business practices involve leveraging its substantial control over sports broadcast licenses to compel Fubo to take on and transmit unwanted, costly, non-sports content. This situation hinders Fubo from providing the sport-focused channel package that its customers desire.

The legal action claims breaches of both federal and local competition regulations. It demands triple compensation, recovery of earned income, and a judicial decree stating that preferential nation terms and package deals are against antitrust legislation.

Disney didn’t immediately respond to a request for comment.

Previously, a federal judge supported essential antitrust arguments from YouTube TV users who had filed a similar lawsuit against Disney. Instead of discarding the case, U.S. District Judge Edward Davila determined that Disney may have exploited its control over Hulu to increase prices for live TV streaming services throughout the market.

In essence, the main issue in the Fubo subscriber’s lawsuit was centered around Disney’s dominance over a popular channel (ESPN) and another streaming service (SLPTV on Hulu). The case questioned whether Disney engaged in anti-competitive practices when negotiating carriage agreements for ESPN, potentially driving up subscription prices for consumers across the market.

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2025-01-15 03:25