The news that Venu Sports is being abruptly discontinued by ESPN, Fox, and Warner Bros. Discovery sent shock waves through the sports media world.
With the Fubo lawsuit being settled after Disney acquired the streaming competitor, there looked to be no more serious hurdles to Venu Sports launching, even as soon as the Super Bowl next month. Instead, Venu is no more after ESPN, Fox, and WBD made the shock announcement on Friday morning.
So what caused the triumvirate of media companies to change course so quickly given how much time and money they each invested into the platform?
Although a number of theories are possible, CNBC‘s Alex Sherman provided the first reporting into the decision to shutter Venu Sports. According to Sherman, the specter of another legal battle with DirecTV and further legal questions around bundling were at the heart of the move to walk away from the joint streaming venture.
But the judge’s response in Fubo’s lawsuit questioned the legality of cable bundling in general, prompting Disney to strike the deal with Fubo, through which Disney would take 70% control of the resulting company. And two days ago, satellite providers DirecTV and Dish sent letters to federal court arguing that the legal questions brought up by the judge remained unanswered.
Rather than risk an extended lawsuit that could jeopardize bundling in general — including Disney’s efforts to bundle its own streaming entities (ESPN, Hulu and Disney+) — the three companies decided to pull the plug on Venu, according to people familiar with the company’s decisions.
After Fubo and Venu Sports settled, DirecTV and Dish made a filing with the judge voicing their displeasure. Although they didn’t say it explicitly, the message was certainly sent that the satellite providers could lodge their own lawsuit to block Venu Sports’ launch. The prospect of another lengthy legal battle was clearly not in the best interest of the companies involved. And with ESPN launching its own Flagship service later next year, Venu Sports would become increasingly duplicative.
After the demise of Venu Sports, DirecTV issued their own statement provided to Awful Announcing, hinting at their satisfaction with the news.
“DIRECTV remains a leader in sports, and we look forward to working with our programming partners – including Disney, Fox and Warner Bros. Discovery – to compete on a level playing field to deliver sports fans more choice, control, and value all-in-one experience. ”
The larger issue at hand, and why ESPN, Fox, and WBD may have chosen to walk away now, is the legal challenge to the overall practice of bundling that could have emerged from further litigation. In her ruling to block Venu from launching in August, Judge Margaret Garnett said this, which piqued interest across the industry as to what it could mean in the future.
“These mind-bending costs do not just hurt the wallets of sports-loving consumers by making them pay for non-sports channels they don’t want, but also hurt those customers who only want entertainment channels but pay significantly higher costs because they are made to pay for unwatched sports, the most expensive of all content.”
ESPN, Fox, and Warner Bros. Discovery all have a lot of skin in the bundling game. So rather than open the door to an unknown myriad of legal challenges and complications that could have come with pushing Venu Sports further, they decided to fold their hand and go back to their own initiatives.
While the Venu skinny bundle is dead, it’s clear that all media companies are just starting to think about how they can combine forces, bundle, and re-bundle to survive the streaming revolution. Fox Sports potentially licensing content to ESPN’s Flagship is just one of an uncountable number of possible roads to take from here.
