Around the time of the August 2024 preliminary injunction hearing in Fubo’s lawsuit against Venu, word started to leak that ESPN’s main priority was the 2025 launch of what it dubbed Flagship, the sports network’s highly anticipated direct-to-consumer app.
Once Fubo surprisingly won the injunction against Venu and its three founders, Walt Disney, Fox Corp., and Warner Bros. Discovery, that sentiment grew. Some observers then believed Disney would end the venture, announced in February 2024 during Super Bowl week (the NFL was not pleased with the news distraction, an early demerit for Venu).
Some headlines and observers characterized the news of the media triumvirate’s axing of Venu as shocking, but that die was likely cast when Judge Margaret Garnett, in sweeping language, granted the injunction while calling into question the industry’s bundling tactics.
“I always got the feeling that Disney wasn’t sure they should have agreed to it,” said one media observer.
Not only had Venu become a distraction to Flagship, but it potentially opened the door to a frontal legal assault on the legality of bundling. Talk about unintended consequences.
“We believe Venu’s joint venture partners were worried that the District Court Judge would not only maintain the injunction preventing Venu from launching but that it would open up a far more problematic attack on channel bundling practices more broadly, as we highlighted back in August (link),” media analyst Rich Greenfield wrote. “Remember, in the U.S. District Court Judge Margaret Garnett’s initial injunction ruling, she stated `it is difficult to avoid the conclusion that, on balance, these practices are bad for consumers…What is clear on the current factual record is that bundling has been uniformly and systematically imposed on each distributor in the live pay TV industry except the JV, preventing any other distributor from offering a multi-channel sports-focused streaming service.’”
Disney’s announced purchase of Fubo earlier this week didn’t douse the legal issues, as DirecTV and DISH parent Echostar sent letters to Garnett asking her to not pull the injunction, and warned they were keeping their options open (a source close to the satellite carriers said that position is so far unchanged by Venu’s elimination).
A source familiar with ESPN’s thinking on the Venu closure, said, “Flagship has been and remains (the) priority. Venu was always a smaller part of [the] overall strategy. For those fans that want more than what Flagship will provide (ESPN only), there are many other options via (pay TV) distributors in the U.S. including slimmed-down (skinny) bundles.”
Skinny bundles, or groupings of sports outlets sold without other content channels–the model of Venu–was the core of the Fubo lawsuit. Fubo alleged it was unable to sell sports skinny bundles because the media companies required those channels to only be sold in combination with other news and entertainment offerings. But the trio of Fox, WBD, and Disney dropped that requirement for Venu.
Now soon to be part of Disney, Fubo is planning an ESPN bundle that may include Fox Sports.
“Changes in the market have led to more distribution flexibility and additional opportunities to reach customers,” the source familiar with ESPN said. “To that end, fans will have options to subscribe to ESPN across a range of price points and product offerings. At the end of the day, the goal is to maximize…overall subscriber count, no matter the platform.”
So who are the winners and losers from news of Venu’s shuttering?
Most directly, the losers are the employees and executives of Venu, who built the infrastructure behind an app that never launched. Also, arguably sports fans who wanted what Venu offered–an app with about 60 percent of the live TV sports marketplace–without other non-sports channels.
Fox and WBD will lose their partnership with ESPN. In particular, Fox now remains without a platform to stream its sports content.
Winners include pay TV distributors that no longer must contend with subscribers leaving for Venu. Investors in Fubo, who stood to be wiped out if the virtual pay TV outlet did not secure an injunction, have seen their shares soar over 300 percent since the acquisition announcement. If one believes the anti-consumer argument about Venu deployed by Fubo, fans are winners (though as they are included as losers, an argument can be made both ways).
One group few will commiserate with are the lawyers. They certainly profited handsomely off the fight over Venu. And with a trial previously scheduled for October, the billings would have kept clicking. So while not quite losers, their gravy train has come to a premature ending.
