For years, sports were one of the last remaining strengths of the traditional cable package, keeping fans subscribed even as millions of TV viewers fully cut the cord and moved to streaming. But cable and sports couldn’t hold out forever, especially once fans got used to the convenience of being able to watch games easily on their phones and laptops as well as TVs, even if only for out-of-market games and more niche sports, at first. Now some high-profile games are available only on streaming platforms.
But the transition to streaming for sports has been more fragmented and confusing than most other kinds of entertainment content. Most fans want to watch their specific teams and specific leagues, not “sports” in general, which makes sports rights a powerful tool to attract and retain viewers. Leagues themselves subdivide their broadcast and streaming rights, pitting distributors – cable companies, media companies, and streamers – against each other. As a result, following a sport or team often requires figuring out and navigating a number of different services. And some games remain tied to a “cable” bundle, even if you can now access that bundle online through what the industry calls virtual multichannel video programming distributors (vMVPDs) like YouTube TV, Sling TV, and Fubo.
This confusing landscape for viewers even led to a Congressional hearing earlier this year, where I testified. It’s been a challenge for media companies, too, since the collapsing cable bundle was a source of easy profits for years. Three major media companies – Disney, Fox, and Warner – have tried to address these challenges by proposing a joint venture, now called “Venu,” that would combine their sports offerings into a single bundle. However, a federal court recently issued an injunction blocking this joint venture from moving forward. In a lawsuit challenging the venture, the court recognized that, citing an amicus brief joined by Public Knowledge with Sports Fans Coalition, American Economic Liberties Project, the Electronic Frontier Foundation, and Open Markets Institute, a joint venture in this market amounts to an agreement between these companies to not compete with each other, and to prevent new competitors from gaining traction.
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What sports fans want is pretty simple: to pay for the sports they want to watch, without having to also pay for a bunch of content they don’t, or can get elsewhere more conveniently. This is called the “skinny” sports bundle in the industry. At the same time, they want more convenience-for services to have more comprehensive offerings, not piecemeal selections of games.
People want skinny bundles, and Venu promised to offer a version of one. The problem is when they are offered by companies working together instead of competing, that claim this is the only way to provide what people want. But companies like Fubo (and even some established cable companies) have been actively blocked from offering packages that focus just on sports, due to the actions of the very companies that want to create a new monopolistic joint venture.
Shortly after the congressional hearing mentioned above, Disney, Fox, and Warner announced Venu, planning to make it available both standalone and as an add-on to existing services like Disney+. In some ways, this is responding to consumer demand: It’s a skinny bundle of just sports, partly addressing the frustrating fragmentation of content.
That said, we should have a healthy skepticism of agreements, like Venu, between competitors to collaborate and not compete. By consolidating sports broadcasting rights under a single entity, Venu would eliminate competition among the participating companies. At the same time, this new entity would be so powerful out of the gate that it could shut out existing and potential competitors by hoarding content. In fact, these three companies have a history of doing just that. As the court explained,
Put simply, the antitrust problem presented by the JV [joint venture] is as follows: if the JV is allowed to launch, it will be the only option on the market for those television consumers who want to spend their money on multiple live sports channels they love to watch, but not on superfluous entertainment channels they do not. And the JV’s corporate owners – the JV Defendants – are the same players that (1) used their longstanding bundling practices to create the void in the pay TV market tailor-made for the live-sports-only JV to fill, and also (2) exercise near-monopolistic control over the ability for a different live-sports-only streaming service to exist and compete with the JV. Indeed, shortly before the JV was announced, the JV Defendants explicitly agreed to “stay clear” of supporting another platform like the JV for at least the next three years.
The court was aware of how, in addition to reducing competition between Disney, Fox, and Warner, the joint venture would also reduce competition overall, as the same companies that now have an interest in seeing Venu succeed also control the rights to sports networks like ESPN that competitors must be able to license to succeed. They can either refuse to license this “must-have” programming or do so only under terms that put competitors at a severe disadvantage. In fact, as the court notes, they’ve been doing this for years.
One company that has experienced this behavior firsthand is Fubo, which filed the lawsuit to stop the joint venture. Fubo is a sports-focused vMVPD, but its channel lineup and prices are not very different from a more general purpose vMVPD like YouTube TV. The reason is simple –that’s all it’s allowed to do. Companies like Disney and Fox, part of the joint venture, have long refused to license only sports programming to Fubo or other innovative or specialized services. Just like how cable customers are forced to pay for dozens of channels they’re not interested in, Fubo has had to carry channels like Disney Jr., Freeform, and Fox Business if it wants to carry ESPN or Fox Sports. Its contracts also require a minimum “penetration” for these less-popular channels, meaning that it can’t make them optional. This means every Fubo subscriber pays for even these less-popular channels. This is the backdrop that explains why the court was so skeptical of the proposed joint venture.
Just blocking Venu from going forward keeps things from getting worse, but doesn’t make them better. We need policies that limit exclusivity, address bottlenecks, and allow for the emergence of sports-focused offerings for sports fans (and sports-free options for people who want those). But blocking the joint venture as currently constituted will prevent the market from consolidating in a way that makes the reforms that are necessary much more difficult to achieve. In addition to holding hearings, many members of Congress have expressed concern with the joint venture and with the state of sports streaming. But to make the sports streaming marketplace fairer to consumers, we likely need new policies that promote competition, not just stopping anti-competitive deals.