Before The Walt Disney Co., Warner Bros. Discovery and Fox Corp. in February formed a joint venture to stream their 14 sports related channels, since named Venu, the companies considered dual partnerships that had far more aggressive subscriber goals.
WBD and Fox named their prospective partnership Project Zenith, according to testimony today during the preliminary injunction hearing in Fubo’s antitrust lawsuit against the three media companies planning to launch Venu shortly. A lawyer for Fubo, pointing to a Zenith proposal from August 2023, asked WBD’s chief revenue officer Bruce Campbell if the projections in the proposal of eight million subscribers paying $40 a month, and 7.1 million subs if the price is $45, was accurate. Campbell agreed.
Meanwhile Fox research from June 2023 displayed during today’s hearing showed a joint venture with just Disney that the two parties discussed would generate 39.1 million subs if the service was priced at $25 a month, and 19 million subs if priced at $43,
Why is this important, at least to Fubo?
Venu is priced at $42.99 a month and the company is projecting five million subs by 2029. Fubo’s contention is that Venu will cannibalize the pay TV market, and the five million figure is grossly under the real number. Earlier this week, Fubo’s co-founder David Gandler testified his company would lose between 300,000 and 400,000 subs (though in subsequent testimony by another witness, this figure is for lost projected future subs, not fully off the current 1.4 million subs Fubo now has).
Disney, WBD and Fox have publicly said that Venu is a complement to the pay TV market and not a threat because the main audience are cord cutters and cord nevers. But Fubo’s lawyers, during a cross examination of Fox’s president of distribution, David Espinosa, put up an email he sent internally earlier this year that had a chart detailing Venu messaging for external and internal audiences.
The external is that Venu’s subs will come from cord nevers and cordcutters. The internal message according to this email, is, “We fully expect it will attract a significant number of customers from pay TV.”
Later in the same document attached to the email, it says Venu makes economic sense if for every four subs, three come from the pay TV universe. Lawyers for the three media companies have been arguing it doesn’t make sense for them to poach pay TV subs because they earn more there than they would on a Venu Sports subscriber.
It’s not entirely clear from the testimony why the dual partnerships did not occur. But Campbell testified, “Fox and Disney were going to go forward whether we joined or not.”
The parties have called 16 witnesses thus far, the first of whom today was Tony Petitti, the Big Ten commissioner. Why he appeared is not clear, as his time on the witness stand was no more than 15 minutes, and he conceded he had not read the complaint, or was even familiar with Fubo’s arguments.
He wrote a declaration supporting Venu earlier this year at the behest of Fox Sports head Eric Shanks, Petitti said. Fox owns the Big Ten Network.
Fubo is seeking to block the launch of Venu Sports, arguing it is an antitrust violation because it corners the market on skinny sports bundles. That’s because Disney, WBD and Fox prevent distributors from forming their own sports bundles in the terms of their carriage agreements, according to Fubo.
How much longer that lasts is unclear as Campbell said pay TV distributors are now asking for the right to do so in the wake of Venu.
There are two witnesses remaining to testify today, and closing arguments are scheduled for Monday morning. The judge will not render her decision immediately.
