Biden’s DOJ, Letitia James, Dem AG side with Fubo in Venu Scrap

President Joe Biden’s Department of Justice and New York Attorney General Letitia James, along with Democratic attorneys general in 15 other states and the District of Columbia, are arguing in new lawsuits that Walt Disney, ESPN, Fox, Warner Bros. Discovery and Hulu’s plan to launch sports-centric streaming platform Venu Sports should be rejected.

The DOJ and the AGs filed amicus briefs with the U.S. Court of Appeals for the Second Circuit on Tuesday, urging the court to uphold U.S. District Judge Margaret M. Garnett’s grant of a preliminary injunction against FuboTV in August. Unless vacated by the Second Circuit or lifted via an out-of-court settlement, the injunction will remain in place at least until a trial, which likely won’t happen until 2025 or later, and will block Venu Sports’ release.

Garnett found Venu Sports problematic under antitrust law, as it involves competitors joining together to put their live sports content on one platform. Although the live sports content on Venu Sports would be non-exclusive and Venu Sports would lack CBS, NBC, CNN, Fox News and other sports and non-sports networks, the $42.99/month platform could put Fubo, which has been denied the ability to offer a thin live sports package – out of business.

Also problematic was that the defendants agreed to “steer clear” of investing in similar streaming platforms and hatch a non-compete clause that would help keep Venu Sports a unique product.

In its brief, the DOJ emphasized the defendant companies’ “dominant” status in broadcasting live sports. The DOJ says the defendants collectively control about 54% of US sports rights and more than 60% of nationally broadcast sports rights. The DOJ reasons that Venu would give the defendants even greater dominance in the distribution of sports-focused television content to consumers.

In addition, the DOJ emphasized that Garnett found “overwhelming” evidence that Venu would cause “anticompetitive effects” because the defendants have agreed to “steer clear of a (Venu)-like platform” and face diminished incentives “to cooperate with a rival”. sports-focused product or to launch their own such products.”

Similarly, the DOJ worries that Venu empowers the defendants “to impose price increases and bundling requirements on rival distributors.”

James and her colleagues make similar points in their amicus brief. The motion seeks to require the defendants to require Fubo and other distributors to “obtain licenses for bundles of content, including non-sports content.”

They also question why Fubo would be required to “distribute and pay affiliate fees for Disney Channel” to obtain a license for ESPN “even though Fubo’s sports-focused subscribers do not want Disney Channel and prefer to buy sports-only products , which could be offered at lower prices than the accompanying products.”

James also takes issue with the defendants’ argument that they have no duty under the law to offer Fubo the chance to deliver a thin live sports package or any terms. James says a no-duty-to-act defense “applies only to a defendant’s unilateral dealings with others” and does not insulate a joint venture like Venu Sports from cartel scrutiny.

Other AGs have a different take on these antitrust issues. In September, the Republican attorneys general of six states (Florida, Alabama, Iowa, Kentucky, Mississippi and South Carolina) filed an amicus brief arguing that Garnett and Fubo are wrong about the law. They insist that Venu Sports, by offering a cheaper alternative to “price-conscious sports fans who have dropped out of or have never been part of the traditional TV ecosystem”, would promote competition in the market. The AGs also agree with the defendants that they have no legal duty to offer Fubo the same terms.

Similarly, former Federal Trade Commission Commissioner Joshua Wright has written on its Substack, Competition on meritthat “once in a while there comes a cartel decision so poorly reasoned and detached from existing legislation that it is difficult to see through. Judge Garnett’s decision in FuboTV vs. Disney et al is, ladies and gentlemen, exactly such a decision.”

Wright, an economist and antitrust attorney, questioned why Garnett would issue an injunction when the judge recognized, as Wright put it, “that Venu TV would increase competition and benefit consumers.”

Whether the dueling of the Democratic and Republican AGs affects the Second Circuit remains to be seen. An interesting factor is timing. Appeals may take a while to play out. It stands to reason that after President-elect Donald Trump is inaugurated on Jan. 20, his DOJ might submit an amicus brief more in line with the views of the Republican AGs — perhaps especially given the animosity between Trump and James, whose office has sued Trump for fraud.

Meanwhile, sports fans are waiting for the chance to buy a thin live sports package.

(This story has been updated to correct the name of Joshua Wright’s newsletter referenced in the 12th episode.)