Earlier this year Disney, FOX, and Warner Bros. Discovery announced they would launch a streaming service to offer live sports without the need for non-sports channels. This was quickly met with a lawsuit from Fubo that asks the judge to block the service from launching. Now, three representatives from Congress are asking questions about the service.
Today Rep. Jerry Nadler (D-NY), Ranking Member, House Judiciary Committee, and Rep. Joaquin Castro (D-TX) have sent a letter to Disney, Fox, and Warner Bros Discovery asking questions about the service. In the letter they say “The Joint Venture raises questions about how this new offering would affect access, competition, and choice in the sports streaming market. Without more complete information about the pricing, intent, and organization of this new venture, we are concerned that this consolidation will result in higher prices for consumers and less fair licensing terms for upstream sports leagues and downstream video distributors.”
In the lawsuit, Fubo, the live streaming service, alleges that the trio of media giants stole from their playbook in a new attempt to thwart Fubo’s business. On of the big complaints Fubo has is that they have wanted to launch a similar service but have been unable to because Disney, FOX, and Warner Bros. Discovery forces them to offer a bundle of channels including non-sports channels.
“The underlying motives and implication of this joint venture also command our scrutiny. Every consumer in America should be concerned about the intent behind this joint venture and its impact on fair market competition,” Fubo said in an earlier statement.
In the letter the representatives asked:
- What are the relevant markets impacted by the Joint Venture?
- How many subscribers is the Joint Venture projected to have within 1, 3, and 5 years of
launch?- Will the Joint Venture distribute channels of non-joint venture partners?
- How will the Joint Venture Partners determine the pricing of their own sports channels
(e.g., Fox Sports, ESPN) included in the Joint Venture?- How do those prices compare to prices at which such channels are currently licensed to
third-party MVPDs or virtual MVPDs?- Will the Joint Venture Partners implement provisions to prevent anti-competitive sharing
of pricing or other competitively sensitive information among each other?- What measures will the Joint Venture Partners implement to prevent interlocking
directorates?- When will the pricing of the Joint Venture be determined and announced?
- What League Properties does each Joint Venture Partner currently hold the rights to,
where “League Property” means a content licensing agreement with any of the following:
the NFL, the NBA, the MLB, the NHL, the NCAA Basketball Tournament, NCAA
Football (by major league) and NCAA Basketball (Men’s and Women’s). What League
Properties to licensors other than the Joint Venture Partners hold the rights to?- For each of the sports channels that will be included in the new service, how many hours
of live events for League Properties does the channel transmit per calendar year?- To what extent will customers be offered opportunities to bundle other products offered
by the Joint Venture partners with the Joint Venture? Will Joint Venture customers be
offered the opportunity to bundle the Joint Venture with direct-to-consumer products of
third parties?- Will the Joint Venture Partners offer stand-alone streaming sports services? If the Joint
Venture Partners decide to offer independent offerings from the Joint Venture, how will
firewalls be implemented to ensure there is no collusion between the Joint Venture and
their independent streaming sports offers?- The Joint Venture Partners currently bid against each other for sports content. However,
the new venture will be pooling sports content among the Joint Venture Partners. Will the
Joint Venture Partners continue to bid competitively against one another for sports rights
as they become available?- Will the Joint Venture Partners make the channels they include in the Joint Venture
available to third parties on non-discriminatory terms?- Will the Joint Venture partners negotiate jointly with MVPDs to license sports
channels? Also, with virtual MVPDs?- Will the Joint Venture Partners continue to require that MVPDs and virtual MVPDs
purchase other programming in addition to their sports channels as a condition of their
licensing agreements? Will the Joint Venture Partners continue to require penetration
minimums for their sports and other channels when negotiating with MVPDs and other
virtual MVPDs?- The companies propose to engage in a form of vertical integration, leveraging their
content assets into a virtual MVPD. In previous transactions involving vertical integration
between programmers and MVPDs (e.g., Comcast-NCBU, AT&T-Time Warner), the
parties made certain commitments to submit licensing negotiations to binding
arbitration. Will joint venture partners make similar commitments?- Prior to negotiation of the Joint Venture, what standalone plans had each of the Joint
Venture Partners considered for making their sports channels available via streaming,
including but not limited the launch of a new virtual MVPD or inclusion in the Joint
Venture Partner’s existing streaming service (e.g., Disney+ or MAX).- Do you anticipate the joint venture will be required to make a filing with the Department
of Justice and Federal Trade Commission under the Hart-Scott-Rodino Act?
They are asking Disney to answer the questions by April 30, 2024, with a copy sent to the Department of Justice. This letter raises questions about how closely the DOJ and congress are looking into this service.
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Correction: only two congressmen sent a letter to Congress, not three. We apologize for the error.