The Department of Justice came out strongly in support of FuboTV in its battle against Venu, the stalled sports streaming app joint venture of Walt Disney, Warner Bros. Discovery and Fox.
In a friend of the court brief, or amicus curiae, the DOJ argued yesterday the three pay TV programmers arguments to overturn a lower court preliminary injunction against Venu were a “red herring,” and that the proposed streaming service posed a threat to competition.
“The evidence that Defendants (Fox, Disney and WBD) would have incentives to foreclose distributors like Fubo from access to unbundled sports content, and `the market power to follow through on these incentives,’ indicated that the formation of Venu may substantially lessen competition,” DOJ argued.
The DOJ’s filing was echoed by a separate amicus filing from The States of New York, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and the District of Columbia.
Fubo alleges Venu stifles competition because it is not required to buy non sports TV programming, but just the 14 sports channels of the three joint venture partners. By contrast, when the trio individually negotiates with distributors like Fubo, sports channels are bundled with entertainment and news channels. So Fubo contends Venu is an effort to corner the market on the so-called skinny sports bundle.
We’re grateful for the support we’ve received from the DOJ and state AGs nationwide. Consumers deserve better: more choice, greater innovation, and fair pricing. Now more than ever, we stand confident in the merits of our case. Happy Thanksgiving 🍁 https://t.co/80uWMSQwQB
— david gandler (@davidgandler) November 27, 2024
A lower court judge in August granted a preliminary injunction days before Venu was to launch, ruling Fubo had made a compelling case that the app would violate the nation’s antitrust laws. Fox, WBD and Disney immediately appealed the judgment, with a court hearing tentatively set for January 2025.
Disney, WBD and Fox contend Venu adds to the competitive mix, and that the lower court judge in error dragged bundling into her decision, which heavily critiqued the practice. While bundling is not at issue in the programmers’ appeal to the 2nd Circuit to overturn the lower court preliminary injunction ruling, the practice is clearly hovering in the background.
Fubo’s core lawsuit, which is proceeding in the lower court, does attack bundling. And the industry is certainly reading the DOJ’s amicus brief for bundling tea leaves. The term bundling is mentioned 24 times in the DOJ’s 44-page amicus, and the word bundle 21 time, with the feds writing, “Defendants point to the district court’s comment that bundling appears `bad for consumers,’ but the court’s point was that many consumers demand the sort of smaller TV package that Defendants’ existing bundling practices have precluded.”
DOJ does not offer an opinion if channel bundling, a decades old practice, is an antitrust violation. But the agency certainly doesn’t scold the lower court judge for taking a broadside against the practice – gratuitously in the opinion of the pay TV programmers.
Typically the federal government chiming in on a case is a big deal. Whether it matters here is another matter. With a change of administrations underway in Washington, DC, the next DOJ might pull the brief, or could even file on behalf of the pay TV programmers. A group of red states led by Florida has already filed on behalf of the pay TV programmers. While she was not Florida’s attorney general at the time of that filing, Pam Bondi, the former Florida AG, is incoming President Donald Trump’s nomination for Attorney General.
Part of the legal dispute stems from a Supreme Court decision that said monopolist companies don’t have a duty to deal with distributors of the product (Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP (2001), and Pacific Bell Telephone Co. v. linkLine Communications, Inc., (2009). So here, that would mean Fox, WBD and Disney have no duty to treat Fubo similarly to Venu.
What the lower court ruled, and the DOJ seconded and called a “red herring,” is that the no duty to deal doctrine only applies to individual companies, not merging or joint venture concerns.
While the appeal court may hear arguments in January, the lower court is scheduled to hear arguments December 13 on motions to dismiss the case. Given the judge’s preliminary injunction ruling, this seems very unlikely. She will also hear a motion from Fox to move its part of the case to California.
In an earlier order, the judge noted due to the sensitive financial information that would be discussed at the hearing, she may seal the courtroom.
