Disney’s surprising move in January to buy majority control of Fubo ended one particular source of antitrust litigation, but has sparked further antitrust concerns. The latest there comes from a letter to the Department of Justice’s antitrust division from Senator Elizabeth Warren (D-MA).
That January deal came with a settlement of Fubo’s lawsuit to block the Disney-Fox-Warner Bros. Discovery joint venture Venu Sports. But those companies scrapped the Venu plan shortly afterwards after DirectTV, Dish and others expressed their continued opposition to the joint venture. (DirecTV went on to launch their own take on a sports skinny bundle with MySports, but it’s rather different.) However, there are still potential antitrust issues with Disney (which owns a lot of content, including linear channels like ESPN) acquiring another distributor like Fubo.
Warren brought those up in this letter, which was addressed to DOJ antitrust division interim head Omeed Assefi and copying Gail Slater (President Trump’s nominee to head the division as assistant attorney general). The letter was first reported by Gene Maddaus of Variety, then released on Warren’s Senate site. Here are some key quotes from that letter, which particularly zeroes in on how this acquisition would put Fubo’s estimated 1.5 million subscribers (as per a September nScreenMedia report), 9% of the estimated vMVPD market, under the same corporate roof as Hulu+Live TV (4.4 million, 26%):
Disney’s proposed acquisition of Fubo appears to allow Disney to simultaneously circumvent the lawsuit while gobbling up a competitor. This proposed acquisition raises significant concerns under antitrust law, would give Disney increased market power and incentives to increase costs for viewers, and should be regarded as another data point in Disney’s history of anticompetitive behavior. I urge DOJ not to be fooled by Disney’s attempt to purchase its way around antitrust law, and to closely scrutinize this proposed acquisition.
This proposed deal is inextricably linked to Disney’s attempt to dominate the sports streaming marketplace through Venu Sports.
…Disney’s proposed acquisition of Fubo threatens to significantly decrease competition in the vMVPD [virtual multichannel video programming distributor] market in presumptive violation of antitrust law. The vMVPD market is already highly concentrated. In recent years, “extreme price increases from programmers” like Disney have forced competitors like Playstation Vue (closed in 2020), TVision (2021), and Duo (2024) to shut down. Today, the global market is concentrated across just four firms which account for over 90% of subscriptions worldwide. Domestic estimates show a similar concentration.
The DOJ uses the Herfindahl-Hirschman Index (HHI) to measure market consolidation. An HHI in excess of 1,800 indicates a highly concentrated market. Even acknowledging that some subscribers may have multiple services, the above estimates suggest an HHI above 3,000. If Disney acquires Fubo, the estimated HHI would climb to approximately 3,500. According to the DOJ’s merger guidelines, an acquisition that increases the HHI of a highly concentrated market more than 100 points is presumptively illegal under antitrust law.
The last line there is worth a note. “Presumptively illegal” does not mean that a merger or acquisition won’t be allowed to go through, but it does mean that there’s a more significant burden on companies to defend it, and it also perhaps increases the chances of striking a deal with conditions. That notably happened with Disney’s purchase of many Fox assets, where a 2018 deal with the DOJ saw Disney sell off Fox’s regional sports networks (to Sinclair; they’re now mostly owned by creditors following bankruptcy proceedings) in exchange for being able to buy Fox’s TV and movie studios and more.
Also of note here, the DOJ filed a brief in November in support of Fubo’s lawsuit against Venu. Of course, that was over a different issue; while Disney/Fox/WBD trying to offer a bundle of their sports content and Disney acquiring a vMVPD are related subjects, they’re not identical. And one Disney defense here may be that they intend to keep offering Fubo as a separate product (although it remains to be seen how long that lasts). So it’s not guaranteed the DOJ will have similar issues to this move to the ones they had with Venu Sports.
And, of course, there’s been a federal administration change since last fall. President Donald Trump’s administration is seen by many analysts as likely being more favorable to mergers and acquisitions than former president Joe Biden’s government was. (And, on that front, opposition from Warren likely matters less than it did when her party held the presidency.) And specifically there, a Reuters analysis Thursday by Michael S. Wise, Martin J. Mackowski and Aden Hochrun of Slater’s comments at her confirmation hearing suggests she may be more open to either completely allowing acquisitions or allowing them with agreements:
Some of the best news for business is that Slater’s DOJ will likely have a more permissive approach when it comes to deals that raise limited competitive concerns. Under Jonathan Kanter, the DOJ sought to block deals rather than allowing divestitures or other remedies to address identified concerns.
Slater appears to be much more open to entering consent decrees to address competitive harms with proposed mergers. She endorsed this more flexible approach, noting that if done properly, remedies “can remove any competitive harm from a merger in order to allow it to proceed in a pro-consumer, pro-competitive manner.”
This change is likely to have two key effects. First, for those few deals that face major opposition, the parties are likely to be able to find settlements that prevent the need for an outright block of the transaction. Second, the DOJ’s willingness to entertain solutions like divestitures or conduct commitments will likely give deal makers more willingness to pursue transactions in the first place, potentially supporting an overall uptick in merger and acquisition activity.
We’ll see what level of antitrust scrutiny the DOJ applies to the Disney-Fubo deal. The department may wind up not blocking this at all, or negotiating some kind of consent decree that doesn’t have a major impact. But it is possible they will raise some opposition to this move, and this public letter from Warren certainly shows there are still some prominent politicians against this particular Disney acquisition.
