The sports streaming joint venture between Disney’s ESPN, FOX, and Warner Bros. Discovery faces a potential regulatory hurdle.
The U.S. Justice Department will review the deal to see if the service could harm consumers, as well as competitors and the sports leagues that work with the companies, according to Bloomberg. The review will begin once the venture has been finalized, Bloomberg said, citing unnamed sources, and the companies have yet to be notified.
The three media giants shocked the world by unveiling the JV earlier this month. The intention is for the three to pool together 14 channels — from ESPN to FS1 and the local FOX and ABC affiliates — that carry sports in a streaming version of a skinny cable TV bundle. The deal would provide sports fans a wealth of content from all of the major leagues.
But the outcry from competitors was immediate. Fubo expressed concerns about the deal, and its CEO David Gandler called for a review. NFL Commissioner Roger Goodell reportedly felt blindsided by the news, and have their lawyers examining the terms of their deals. Grant Spellmeyer, CEO of ACA Connects, which represents smaller cable companies, blasted the deal and lauded the Justice Department.
“It’s anticompetitive for the biggest media players to join forces while locking out traditional linear video providers, including our Members from offering the same packages at the same prices,” Spellmeyer said in a statement issued today. “Fans deserve a level playing field in the sports media landscape without the threat of these giants controlling the marketplace and jacking up prices.”
Spokesmen for ESPN, FOX, Warners, and the Justice Department weren’t immediately available for comment.
The announcement was for the three companies to begin working together, although FOX CEO Lachlan Murdoch said he had seen some early mockups of what the service would look like. There are a number of questions about the service, including the price, but it’s clear the JV would hold a majority of the sports rights in the U.S.
That’s concerning for almost everyone not involved with this deal, from cable companies who stand to lose customers to this streaming service, to the sports leagues who weren’t consulted on the agreement, and the rival media companies that stand to get boxed out. Disney CEO Bob Iger and Murdoch say they’re going after a new audience of “cord nevers” who already aren’t on cable, but most experts believe cable could potentially see an acceleration of cord cutting.
Bloomberg noted that Assistant Attorney General for Antitrust Jonathan Kanter dodged a question about the new sports streaming service in a public appearance last week, citing The Verge.