Lawyers for DirecTV and EchoStar’s Dish have asked a U.S. district judge to reconsider a dismissal of claims by Fubo TV against the Venu Sports streamer after a surprise merger with Hulu + Live TV.
U.S. District Judge Margaret M. Garnett of the Southern District in New York in August granted Fubo TV a motion for a preliminary injunction to block the launch of the Venu sports streaming joint venture proposed by Disney, Fox Corp. and Warner Bros. Discovery. But the sports-focused streamer secured a path to potentially launching after Fubo agreed to drop its lawsuit against Venu as it merged with Disney’s streaming multichannel video service Hulu + Live TV.
To potentially block that launch on completion of the proposed merger transaction, DirecTV and Dish on Jan. 7 wrote U.S. District Judge Garnett to raise a red flag over the dismissal of Fubo’s claims against Venu and lifting the preliminary injunction on anti-competitive grounds.
“Through the settlement and acquisition, the defendants have purchased their way out of their antitrust violation,” lawyers for EchoStar wrote the court. For its part, DirecTV joined EchoStar in asking the court to potentially block the launch of Venu, despite the settlement of outstanding litigation involving Fubo and the proposed sports streamer.
“This settlement clears the path for Venu to launch unencumbered by removing the injunction the court imposed to preliminarily prevent the immediate and irreparable harms the JV launch presents. DirecTV is just one of several non-parties that expressed ‘grave concerns’ about the impact Venu would have on competition for sports programming,” lawyers for DirecTV argued.
The recent deal between Fubo and Disney to possibly allow the launch of Venu to move forward would see the new company continue to be traded publicly under the Fubo name, but with Disney retaining a controlling 70 percent ownership and Fubo management, including co-founder and CEO David Gandler, running the combined venture.
The deal would also create a much bigger player in the virtual multichannel video provider (vMVPD) space to take on market leader YouTube TV.
But DirecTV and EchoStar urged the court to uphold the initial anti-competitive grounds behind granting Fubo the original preliminary injunction against Venu after a lawsuit was brought against the bid by Disney, Fox and WBD to to pool together their sports licensing rights to form the new sports streaming service.
“Now, with the injunction undone by voluntary dismissal, DISH, Sling and other distributors will suffer antitrust injury. Their services will be hampered by the massive incentive that the JV defendants have to raise programming fees for distributors that compete against Venu, and they will be effectively foreclosed from competing,” lawyers for EchoStar wrote in their letter to Judge Garnett.
At the heart of Fubo’s original lawsuit against Venu were allegations that Disney, Fox and Warners leverage their control of must-have sports to force rivals into carrying dozens of pricey, unpopular channels as a take-it-or-leave-it condition of licensing critical sports channels. These anticompetitive bundling requirements, it was alleged, lead to increased costs for consumers because they’re forced to pay for content they don’t watch.
“DirecTV continues to evaluate its options with respect to the joint venture, the parties’ settlement, defendants’ tying practices, and other anticompetitive harms, and it joins EchoStar in requesting that the court reject any effort by the defendants to vacate any prior rulings or findings in this case,” lawyers for DirecTV added in their intervention.
