New Streaming Grand Slam or Strike Out – All About the Proposed Joint Venture Between ESPN, Fox, and Warner Bros. Discovery

Shortly before one of the largest televised sporting events, Super Bowl LVIII, three sports providers — ESPN, Fox, and Warner Bros. Discovery — announced they planned to create a joint venture to launch a new, sports-only streaming service in the United States. The three venturers aim to create a new platform that brings their own “portfolios of sports networks, direct-to-consumer (DTC) sports services,” including content from all the major professional sports leagues and college sports.¹[1]Olivia Coryell, ESPN, Fox and Warner Bros. Discovery Forming Joint Venture to Launch Streaming Sports Service in the U.S., ESPN PRESSROOM (Feb. 6, 2024) https://espnpressroom.com/us/press-releases/2024/02/espn-fox-and-warner-bros-discovery-forming-joint-venture-to-launch-streaming-sports-service-in-the-u-s/amp/. Current sports and entertainment media are calling their proposed offering a “skinny bundle” as it only includes content from the venturers relating to sports compared to the typical cable packages that provide a consumer with a wide variety of content from the venturers’ portfolios.²[2]Anthony Crupi, ESPN/FOX/WBD Mega Streaming Skinny Bundle to Shape TV’s Future, Sportico (Feb. 6, 2024 at 8:28pm) https://www.sportico.com/business/media/2024/espn-fox-wbd-mega-streaming-skinny-bundle-1234765729/ This new skinny bundle will launch at some point in 2024 and allow consumers to streamline apps to watch sporting events. The bundle would enable subscribers to combine the new product with existing streaming providers like Disney+, Hulu, and Max.³[3]Id. The joint venturers believe this new skinny bundle is a major win for sports fans in the United States as it will provide a dynamic line-up of sports-only content tailored to each fan’s interests.

Currently, many sports fans subscribe to various streaming services to watch every event they want. To them, the new bundle sounds like a great idea. However, there are some potential legal concerns with the joint venture—especially under the antitrust laws. This joint venture comes during extremely aggressive antitrust enforcement by the Department of Justice (DOJ). The entity has taken a “critical eye to any effort to concentrate industries or combine corporate power.”⁴[4]Bryan Koenig, Antitrust Issues to Watch in Sports Giant Streaming Venture, LAW360 (Feb. 13, 2024, 7:02 PM) https://www.law360.com/articles/1795590/antitrust-issues-to-watch-in-sports-giants-streaming-venture. Additionally, the DOJ has taken a deeper look into mergers relating to the sports and entertainment industries in recent years.⁵[5]Id.

Further, on February 20, 2024, just two weeks after the announcement of the joint venture, fuboTV (Fubo) filed a federal antitrust lawsuit against the venturers, alleging that their new proposed streaming service violates the Sherman Antitrust Act as it will decrease competition and restrain trade.⁶[6]FuboTV et. al. v. The Walt Disney Co., et. al., No. 1:24-mc-00070 (SDNY filed Feb. 20, 2024) https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rol5ifmeF3hw/v0. While this lawsuit is still in the pleadings stage, the venturers must remain mindful of this litigation when determining their next steps. In light of these concerns, this article examines the potential for a DOJ Antitrust Division investigation and how a court might analyze Fubo’s private antitrust claims.

I. Strike One: The Department of Justice Investigation
While the joint venture is still in its preliminary stages, the DOJ has already announced that it plans to look into the final product over concerns that it may harm consumers, media rivals, and the sports leagues themselves.⁷[7]Leah Nylen and Chris Dolmetsh, Fubo Sues Fox, Warner Bros, Disney Over Sports Streaming, BLOOMBERG (Feb. 20, 2024, 4:14 PM) https://www.bloomberg.com/news/articles/2024-02-20/fubo-sues-fox-warner-bros-disney-over-sports-streaming-deal. The probe will most likely focus on “how the companies pay for carriage right from sports leagues and on how they will package, price, and sell their libraries.”⁸[8]Bryan Koenig, Antitrust Issues to Watch in Sports Giant Streaming Venture, LAW360 (Feb. 13, 2024, 7:02 PM). The DOJ has not formally notified the venturers of the review. While the probe may not lead to any action, the venture arises when the DOJ has been very observant of mergers, especially when they would allow big companies to become more dominant.⁹[9]Id.

For the venturers, looking at the DOJ’s recent history with mergers in the sports and entertainment industry may be helpful. Most recently, the DOJ announced that they would probe the PGA-LIV Golf merger, despite the PGA Tour stressing that it does not believe the deal to be a merger.¹⁰[10]Tim Baysinger, U.S. Dept. of Justice said to Probe PGA-LIV Merger, AXIOS (Updated Jun. 15, 2023) https://www.axios.com/2023/06/15/us-dept-of-justice-said-to-probe-pga-liv-merger. While the DOJ has yet to announce whether the agreement between the two is anticompetitive, it has stalled all developments between the entities.

In 2018, the DOJ sued to stop a similar merger between Time Warner and AT&T, concerned that it would create a “telecom giant” that could withhold programming to maximize profits.¹¹[11]Leah Nylen and Chris Dolmetsh, Fubo Sues Fox, Warner Bros, Disney Over Sports Streaming, BLOOMBERG (Feb. 20, 2024, 4:14 PM). The DOJ felt that the merger between Time Warner and AT&T, which combined AT&T’s distribution network with Time Warner’s programming, would lead to higher consumer prices.¹²[12]Id. While the DOJ lost in that case, it might make the same argument against the sports streaming joint venture, which potentially will decrease competition and increase consumer prices. This joint venture would combine three giants in sports streaming content into one service, potentially decreasing competition and increasing consumer prices.

Further, in 2018, when Disney bought assets from Fox, it led to a DOJ investigation. The DOJ allowed for the deal for everything the parties agreed to but sports assets. They felt that Fox and Disney were “two of the country’s most valuable cable sports properties,”¹³[13]Id. and the merger of the two would be anticompetitive. Undoubtedly, the venturers here are some of the most important providers of sports streaming content. The venturers believe that the new service would be consumer-friendly as it is a skinny bundle and provides consumers with a new product – a streaming service just for sports. Their potential issue would be in the setup. The venturers need to ensure they will still compete for content by bidding against each other for rights to telecast sporting events and league games rather than allowing the venture to prevent bidding against each other for rights.¹⁴[14]Id. They will need to be cognizant to ensure that they will still compete against each other and that the new service will not harm consumers in similar ways to how the DOJ felt the AT&T and Time Warner deal did.

II. Strike Two: FuboTV’s Private Antitrust Claims
FuboTV sued the joint venturers in New York federal court under Section 1 of the Sherman Act, which scrutinizes agreements among competitors in a given market and whether they are anticompetitive and would harm consumer welfare.¹⁵[15]15 U.S.C. § 1 (approved Oct. 2, 2023). Fubo specifically alleges that the joint venture is per se unreasonable as it will require Fubo to pay more for content, lessen competition in the market, and prevent it from offering its own skinny bundle.¹⁶[16]FuboTV et. al. v. The Walt Disney Co., et. al., No. 1:24-mc-00070 (SDNY filed Feb. 20, 2024).

Fubo first states that the joint venture is anticompetitive as it is a “horizontal agreement between competitors to exclusively license” content while denying other distributors the same opportunity.¹⁷[17]Id. Fubo, which originally wanted to provide a sports-only bundle to its consumers, was forced by the venturers to carry expensive, non-sports-related content as a licensing condition of the defendant’s sports channels.¹⁸[18]Fubo Sues The Walt Disney Company, FOX Corp., Warner Bros. Discovery and Affiliates for Antitrust Practices, fuboTV (Feb. 20, 2024) https://ir.fubo.tv/news/news-details/2024/Fubo-Sues-The-Walt-Disney-Company-FOX-Corp.-Warner-Bros.-Discovery-and-Affiliates-for-Antitrust-Practices/default.aspx.

Fubo further alleges that since the venturers collectively control access to most commercially critical United States sports, there is a potential for horizontal collusion between the three as their aligned interests will provide an opportunity and incentive to fix licensing prices for other third parties.¹⁹[19]FuboTV et. al. v. The Walt Disney Co., et. al., No. 1:24-mc-00070 (SDNY filed Feb. 20, 2024). Similarly, Fubo states that the venture will increase the defendants’ incentives to shut out or raise the carriage fees they charge to third parties, creating an environment where the venture is the only streaming option.²⁰[20]Id. Fubo currently pays thirty to fifty percent more in content licensing rates than other distributors for the same content.²¹[21]Hailey Konnath, Fubo Wants Sports Giants’ ‘Unlawful’ Streaming Plan Blocked, Law360 (Feb. 20, 2024, 11:04 PM) https://www.law360.com/articles/1804831/fubo-wants-sports-giants-unlawful-streaming-plan-blocked.

While Fubo alleges that the joint venture is per se unreasonable, courts rarely find antitrust defendants’ conduct to be per se unreasonable, especially in cases relating to sports. Therefore, if this matter goes to trial, the court will likely employ a rule of reason analysis to determine if the joint venture violates the Sherman Act. A rule of reason analysis follows “a three-step, burden-shifting”²²[22]Ohio v. American Express Co.,138 S.Ct. 2274, 2284 (2018). process to determine whether the restraint has an “anticompetitive effect that [is] harmful to the consumer and restraints stimulating competition that are in the consumer’s best interest.”²³[23]Id.

The first step is for the plaintiff “to prove that the challenged restraint has a substantial anticompetitive effect.”²⁴[24]Id. In their complaint, Fubo alleged that the joint venture will have anticompetitive effects on the market. They would need to define the relevant market. Their complaint stated that the market is for sports content consumers in the United States.²⁵[25]FuboTV et. al. v. The Walt Disney Co., et. al., No. 1:24-mc-00070 (SDNY filed Feb. 20, 2024). The defendants would try to define the market more broadly, including anyone in the United States who uses streaming services to watch any kind of programming.

If the plaintiff proves the restraint has an anticompetitive effect, the burden “shifts to the defendant to show a procompetitive rationale for the restraint.”²⁶[26]Id. Here, the defendants may argue that offering a skinny bundle is procompetitive as it prevents consumers from purchasing all of the channels in other streaming services or cable bundles, often called thick bundles. Further, the defendants might argue that the joint venture is procompetitive as it decreases consumer costs since they will not have to subscribe to as many streaming services for the same content. Finally, the defendants could argue that the venture is not anticompetitive as each venturer plans to continue offering their own brands and distribution options with each sport remaining separate.²⁷[27]Jeff Baumgartner, DoJ to Review ESPN-Fox-WBD Sports Streaming JV – Report, LIGHTREADING (Feb. 20, 2024) https://www.lightreading.com/video-streaming/doj-to-review-espn-fox-wbd-sports-streaming-jv-report.

Lastly, if the defendant has a procompetitive reason for imposing the restraint, the burden shifts back to the plaintiff to prove that there is a less restrictive means to achieve the same “procompetitive efficiencies.”²⁸[28]Id. Here, Fubo could suggest that it would be less restrictive if the defendants allowed them to offer a skinny bundle of just sports content as well. This would ensure that there is a competitor with the joint venture if Fubo can provide the same or a similar bundle. There is a benefit to the skinny bundle, which is what Fubo wants to offer themselves, but the current restrictions may be anticompetitive.

III. Strike Three: What is Next for the Joint Venture?
Overall, it is too early to tell what antitrust threats the venture will ultimately face. Fubo’s lawsuit might be strategic only. They may have no intent to win the case, however, it will slow down the roll-out of the new service. Additionally, their lawsuit will draw more DOJ attention to the joint venture and provide more ammunition for the DOJ to launch its investigation. While the DOJ announced they plan to investigate the venture, Fubo’s lawsuit may lead to a more thorough look and warrant the DOJ to potentially limit the venture’s operation or shut it down completely. Finally, Fubo’s complaint may solely be an attempt to force the venturers to treat Fubo less discriminately and allow them to offer their own skinny bundle.

While the joint venture seems like it would be a grand slam for sports fans, there is a chance it could strike out based on antitrust issues. If it gets off the ground and past the antitrust risks, it might be a home run for sports consumers in the United States, as it would significantly reduce the number of services needed to stream sports content.

Written by: Madison Huberman
Madison is a 2025 J.D. Candidate at Brooklyn Law School.