Judge temporarily blocks sports streaming service Venu, siding with Fubo on antitrust concerns

A U.S. judge temporarily blocked media companies Disney, Warner Bros. Discovery and Fox from launching their sports streaming service, Venu, according to court filings.

The temporary injunction, granted in response to a lawsuit brought by Fubo TV, comes just weeks ahead of the start of the National Football League season. The companies had planned to launch their service by that date.

Fubo, an internet TV bundle akin to the traditional pay TV package, alleged in its lawsuit that Venu was anticompetitive and would upend its business. Fubo’s stock gained 16% Friday on the news of the injunction.

“Today’s ruling is a victory not only for Fubo but also for consumers. This decision will help ensure that consumers have access to a more competitive marketplace with multiple sports streaming options,” said Fubo CEO David Gandler in a press release after the court decision.

Warner Bros. Discovery, Fox and Disney’s ESPN announced the formation of the joint venture streaming service in February. Soon after, Fubo filed an antitrust lawsuit against the venture.

On Friday, Fubo said it intends to move forward with its antitrust lawsuit against the companies for their anticompetitive practices. In recent months, lawmakers, including Sen. Elizabeth Warren, D-Mass.; Sen. Bernie Sanders, I-Vt.; and Rep. Joaquin Castro, D-Texas, sent a letter pushing to scrutinize Venu.

“We respectfully disagree with the court’s ruling and are appealing it,” Warner Bros. Discovery, Fox and Disney’s ESPN said in a joint statement on Friday.

“We believe that Fubo’s arguments are wrong on the facts and the law, and that Fubo has failed to prove it is legally entitled to a preliminary injunction. Venu Sports is a pro-competitive option that aims to enhance consumer choice by reaching a segment of viewers who currently are not served by existing subscription options.”

Earlier this month, Venu announced pricing of $42.99 per month.

The service would offer the complete suite of live sports rights owned by the parent companies, which includes the National Basketball Association, National Hockey League, Major League Baseball, college football and basketball, among others. Venu subscribers would also have access to 14 traditional TV sports networks of its parent companies, including ESPN, ABC, Fox, TNT and TBS, as well as the streaming service ESPN+.

The expensive price point is common when it comes to streaming live sports so it doesn’t shake up any carriage agreements with traditional pay TV distributors.

In court documents, U.S. Judge Margaret Garnett noted that the three companies control about 54% of all U.S. sports rights, and at least 60% of all nationally broadcast U.S. sports rights.

“There is significant evidence in the record that the true figures may be even larger,” Garnett said in court papers.

“This means that alone, Disney, Fox, and [Warner Bros. Discovery] are each significant players in live sports licensing, who otherwise compete against each other both to secure sports telecast rights and to attract viewers to their live sports programming. But together, they are dominant,” Garnett said in her decision.

Outside of these companies, Paramount Global’s CBS and Comcast’s NBC are the other largest holders of U.S. sports rights. Streaming services, such as Amazon’s Prime Video, have also begun offering live sports exclusively.

Traditional pay TV distributors have been losing customers at a fast clip as they opt for streaming services and out of the notoriously expensive bundle. Meanwhile, companies such as Fubo — a streaming option of the bundle — have seen their prices rise due to the high programming costs related to the networks they carry.

The marketing around Venu so far had been that it would target sports fans outside of the traditional pay TV bundle.

But Fubo’s lawsuit alleged that the sports streaming service violates antitrust law, and is the latest example of anticompetitive behavior from the three media companies.

A multiday hearing took place in the last week, in which representatives for Fubo, as well as satellite TV bundle providers DirecTV and EchoStar’s Dish — which also offer competing internet TV bundles and supported Fubo in the suit — argued the streaming bundle would be detrimental to their businesses.

During the hearing, an attorney for Warner Bros. Discovery told the judge an injunction would “terminate” Venu, Front Office Sports reported.

“This ruling is a major victory for consumers and competition in the video marketplace,” Jeff Blum, executive vice president of external and government affairs at EchoStar, said in a statement.

“We are pleased with the court decision and believe that it appropriately recognizes the potential harms of allowing major programmers to license their content to an affiliated distributor on more favorable terms than they license their content to third parties,” DirecTV said in a statement Friday.

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.