There are many notable elements with this week’s news of Disney acquiring majority control of Fubo and combining it with Hulu + Live TV (at least operationally; both of those virtual multichannel video programming distributor services will remain offered separately for now). One of the most significant is how that deal involves a settlement (from ESPN parent Disney, Fox, and TNT Sports parent Warner Bros. Discovery) in the lawsuit Fubo brought against joint venture Venu Sports. But that settlement may not settle everything.
The settlement in that Disney-Fubo deal features Disney, Fox, and WBD combining to pay $220 million to Fubo. And that’s raised hopes of Venu Sports actually launching, and perhaps very quickly, with recent reporting suggesting they might try to launch ahead of Super Bowl LIX on Feb. 9. But while it was Fubo who was suing over Venu, many other MVPDs expressed support for Fubo’s quest.
In particular, DirecTV and Dish (as well as cable channel Newsmax and consumer advocacy groups) signed on to a “coalition letter” Fubo sent to a range of key Senate and House elected officials in May (which got a lot of significant politician responses). And while those MVPDs didn’t actually sue or join the Venu lawsuit, many mused in the wake of the Fubo settlement that another MVPD might file their own suit against Venu.
That hasn’t happened yet (however, NYC law firm Halper Sadeh LLC announced they’re investigating if Fubo’s management followed their fiduciary duties to shareholders in this deal). But Dish parent EchoStar expressed major concerns to Judge Margaret Garnett, who oversaw the Fubo-Venu trial, in a letter made public Tuesday. And DirecTV followed suit Thursday in perhaps even stronger terms with a similar public letter to Garnett:
DirecTV Venu Letter 01-09-25 by Andrew Bucholtz on Scribd
Some key lines from that:
This settlement clears the path for Venu to launch unencumbered by removing the injunction the Court imposed to preliminarily prevent the immediate and irreparable harms the JV launch presents.
DIRECTV is just one of several non-parties that expressed “grave concerns” about the impact Venu would have on competition for sports programming, given that Venu would “offer[] content in a manner that [the Defendants] do not allow DIRECTV or other distributors to offer to consumers.” …The preliminary injunction has protected consumers and distributors alike from the JV Defendant’s scheme to “capture demand,” “suppress” potentially competitive sports bundles, and impose consumer price hikes.
By this settlement, Defendants pay off and seek to subsume the very competitor that raised these antitrust violations to the Court. However, Defendants cannot purchase their way out of the antitrust violations.
DIRECTV continues to evaluate its options with respect to the joint venture, the parties’ settlement, Defendants’ tying practices, and other anticompetitive harms, and it joins EchoStar in requesting that the Court reject any effort by the Defendants to vacate any prior rulings or findings in this case.
And here’s the EchoStar letter:
EchoStar Venu Letter 01-07-25 by Andrew Bucholtz on Scribd
And some key lines from that:
We write regarding the recent settlement between the Plaintiff and Defendants and the resulting dismissal of the above-captioned matter by stipulation. The Defendants have been found preliminarily to have violated the antitrust laws by their plan to launch a joint venture competing with distributors like DISH, for whom the Defendants are also the essential suppliers. The Court also denied the Defendants’ motion to dismiss the Plaintiff’s other claims, including claims that the Defendants have “tied” their programming content in violation of the Sherman Act. The Court’s decisions stand despite the dismissal; they may not, and should not, be vacated or diminished in any manner.
Through the settlement and acquisition, the Defendants have purchased their way out of their antitrust violation. But the Court’s decisions have correctly found harm that sweeps past the Plaintiff to the consuming public, independent programmers, and distributors, including DISH. In the Court’s words: “Fubo is not alone in navigating these imposed bundling requirements. Mr. Schanman, Executive Vice President of Video Services for EchoStar [], testified extensively to his experience negotiating carriage agreements with the JV Defendants.”
…The parties’ settlement appears designed to eliminate court jurisdiction over this multifarious harm by effectuating the preliminary injunction’s expiration, rather than addressing the underlying competition issues. Defendants were able to do this through a $220 million payment (plus a $145 million loan) to Plaintiff Fubo.
Now, with the injunction undone by voluntary dismissal, DISH, Sling, and other distributors will suffer antitrust injury. Their services will be hampered by the massive incentive that the JV Defendants have to raise programming fees for distributors that compete against Venu, and they will be effectively foreclosed from competing. Thus, the JV Defendants will be starving EchoStar and other distributors with one hand of the skinny sports bundle that they will be supplying to consumers with the other.
As with the DirecTV letter, EchoStar only commits to “evaluating its options” here. And legal action from either of these companies may carry some challenges given their various business agreements with Disney. Indeed, as Matthew Keys noted around the Fubo-Hulu + Live TV merger, the DirecTV-Disney carriage deal struck in September (after a protracted and acrimonious carriage dispute) could complicate DirecTV’s ability to sue here. DirecTV said during those negotiations, including with a complaint to the FCC, that Disney was trying to impose a term in that carriage agreement where DirectTV executives couldn’t call Disney’s actions anticompetitive.
It’s unclear just where that specific debate landed, although the “anticompetitive” and “antitrust” language in DTV’s letter here suggests Disney didn’t fully get what they wanted. But there would be hurdles for DirecTV and Dish in suing over Venu, which is part of why they let Fubo take the lead in the Venu lawsuit despite sharing some of that company’s concerns. Now that Fubo has dropped the lawsuit around this merger, it remains to be seen if one of these MVPDs, or anyone else, will file further litigation to try and stop Venu.
At any rate, it’s at least quite notable to see prominent MVPDs like DirecTV and Dish calling out Disney (a company they have to do a lot of business with) so publicly. And it’s interesting to see them use such strong language as “Defendants cannot purchase their way out of the antitrust violations.” It remains to be seen what’s next for the Venu plan, but these letters make it clear that MVPD resistance to the idea didn’t end with the Disney-Fubo deal.