Takeaways for live sports programming from the fuboTV antitrust litigation

Reuters

11-04-2025

April 11, 2025 - In February 2024, Disney, Fox, and Warner Bros. Discovery (WBD) announced plans to form a joint venture (JV) to combine their sports programming content in the first standalone live sports-only streaming service. This service was eventually entitled Venu Sports.
Shortly after the JV was announced, Fubo — a distributor offering a specialized streaming service focused on live sports — filed suit in the Southern District of New York to block it. Fubo alleged that the JV members' licensing practices violated Section 1 of the Sherman Act and that the JV would lessen competition under Section 7 of the Clayton Act.
After expedited discovery and a six-day preliminary injunction hearing on the Venu-related allegations, on Aug. 16, 2024, Judge Margarett Garnett of the Southern District of New York granted Fubo's request for a preliminary injunction. See fuboTV, Inc. v. Walt Disney Co., No. 1:24-cv-01363, ECF 290 (S.D.N.Y. 2024) (the "PI Opinion").
On Dec. 13, 2024, Judge Garnett also denied Defendants' motions to dismiss Fubo's Section 1 claims. Id. at ECF 367 (the "MTD Opinion").
Venu initially planned to charge consumers $42.99/month for all of the live sports programming of Disney, Fox, and WBD, comprising 14 linear sports networks.
The Court found Disney, Fox, and WBD collectively own the broadcast rights to approximately 54% of all U.S. live sports and nearly 98% of all playoff games, demonstrating how transformative the JV could have been.
Fubo's Clayton Act Section 7 claim
Section 7 of the Clayton Act prohibits transactions whose effect "may be substantially to lessen competition in any line of commerce in any section of the country." United States v. Phila. Nat'l Bank, 374 U.S. 321, 355 (1963). The PI Opinion found there was a substantial likelihood that Fubo would succeed on the merits of its Section 7 claim. See fuboTV, ECF 290 at 34.
Judge Garnett's PI Opinion relied heavily on United States v. Columbia Pictures, 507 F. Supp. 412 (S.D.N.Y. 1980), aff'd, 659 F.2d 1063 (2d Cir. 1981), which she found "strikingly similar to this case." fuboTV, ECF 290 at 36. The Columbia Pictures defendants were film studios that collectively controlled over half of the newly released movies and sought to form a JV to create a pay TV movie channel called "Premiere."
The U.S. Department of Justice (DOJ) challenged the joint venture because it would substantially lessen competition for licensing of movies, and it was enjoined in 1980. But beyond this parallel, Judge Garnett's PI Opinion was also notable for its considerations of (i) the relevant antitrust market, (ii) the application of antitrust law to a JV like Venu, and (iii) Defendants' longstanding bundling practices.
Relevant market
When analyzing a JV under Section 7, a court must first define a relevant market. See Brown Shoe Co. v. United States, 370 U.S. 294, 324 (1962). While Fubo proposed multiple different markets, the Court instead found that Venu likely would lessen competition in a market it defined as the "Live Pay TV Market." fuboTV, ECF 290 at 38.
The Court found that the Live Pay TV Market — populated by Programmers (e.g., Defendants), Distributors (e.g., Fubo and DirecTV), and Creators (e.g., sports leagues) — properly accounted for the wide variety of consumers (e.g., fans of particular teams or sports, general sports fans, fans of niche sports).
Judge Garnett rejected Defendants' proposed market — the "Pay TV Market," which would include Subscription Video on Demand (SVOD) services like Netflix — because most live sports are unavailable on SVODs.
Joint ventures
While the Supreme Court recently reaffirmed the potential benefits of JVs, Judge Garnett's opinion was far more skeptical. Compare Nat'l Collegiate Athletic Ass'n v. Alston, 594 U.S. 69, 88 (2021) with fuboTV, ECF 290 at 46-54. Judge Garnett viewed Venu not as a unilateral new actor, but as concerted action by the three Defendants. Judge Garnett found the structure of Venu would have provided "Defendants an unobstructed runway to establish market dominance . . . and drive out competitors [like Fubo]." Id. at 47.
Additionally, Judge Garnett found Defendants' core argument — that actions by Venu should be considered unilateral — inapposite. Defendants argued the Court should not consider the underlying creation of Venu, but only Venu's existence as a new competitor in the market, as the Supreme Court did in both Verizon Commc'ns Inc. v. Law Offs. of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) and Pacific Bell Tel. Co. v. linkLine Communications, Inc., 555 U.S. 438, 442 (2009).
These cases stand for the proposition that competitors — like Venu would have been to Fubo — have no "duty to deal" with one another. But Judge Garnett found this inapplicable because this case was in the Section 7 context and those cases were in the Section 2 context, which may have broader implications for future JVs among horizontal competitors.
Bundling
Judge Garnett's PI Opinion did not reach the merits of Fubo's allegations that Defendants' longstanding bundling practices constituted unlawful tying under Section 1 of the Sherman Act. Nevertheless, the Court found bundling served as "crucial context" for Fubo's Section 7 claim. See fuboTV, ECF 290 at 46.
Without ruling on the issue, the Court found that Defendants' bundling "ha[d] been uniformly and systematically imposed on each distributor in the live pay TV industry except the joint venture." See id. at 45. So, the unbundled nature of Venu would have increased its attractiveness to consumers, further enabling the JV to harm future competition as the only live sports-only streaming service. Id. at 40, 45-48.
The appeal
Defendants immediately appealed the PI Opinion on various grounds to the 2nd U.S. Circuit Court of Appeals. The appeal drew significant attention and amicus briefing from antitrust commentators, sports TV industry groups, state attorneys general, and representatives of the federal government — including the DOJ.
Fubo's Sherman Act Section 1 claims
After the PI Opinion was issued, Defendants filed renewed motions to dismiss Fubo's Section 1 claims. These claims were separate from Venu and alleged that (i) Fox's and Disney's bundling practices constituted illegal tying of their sports channels with their non-valuable channels, and (ii) all Defendants had separately agreed with their owned subsidiaries to set a price floor through the use of most-favored nation (MFN) clauses.
Under Section 1, tying (i.e., the requirement that a customer purchases a different product alongside the one it wants) can be an antitrust violation when the seller has sufficient power in the relevant antitrust market for the product the customer wants to "coerce" the customer to purchase another product. See Jefferson Parish Hospital Dist. No. 2 et al. v. Hyde, 466 U.S. 2, 3 (1984).
Similarly, under Section 1, vertical restraints like MFN clauses can be considered anticompetitive when used by firms with market power. See United States v. Apple, Inc., 791 F.3d 290, 320 (2d Cir. 2015).
After oral argument on Dec. 13, 2024, Judge Garnett again ruled for Fubo. She found that Fox and Disney had tied two distinct products — sports and non-sports channels — and that Fubo plausibly alleged actual coercion.
She also found that even though Fox and Disney had presumptively insufficient market shares to infer either had market power, the combination of their live sports licenses and market shares created market power for both. She found that Fubo sufficiently pleaded that bundling caused Fubo to pay more and pass that cost on to consumers.
Regarding the MFN claims, she found that Fubo had plausibly alleged (i) Defendants each had market power and (ii) a connection between the price Fubo pays and the alleged price floor set by Defendants.
Aftermath
This litigation was ultimately resolved on Jan. 6, 2025, just hours before the parties were set to argue Defendants' appeal before the 2nd Circuit, when Disney announced it was purchasing approximately 70% of Fubo and would combine it with its Hulu + Live TV business. As part of a settlement, Defendants agreed to pay Fubo a total of $220 million and Disney provided Fubo a $145 million loan.
Defendants then announced they would be relaunching Venu, but after receiving letters from DirecTV and EchoStar, Dish Network's parent, on Jan. 10, 2025, Defendants decided to "discontinue" Venu to "focus[] on existing products and distribution channels." Press Release, Joint Statement from ESPN, Fox and WBD (Jan. 10, 2025).
The Disney/Fubo transaction is being reviewed by the DOJ and has drawn attention from elected representatives like Senator Elizabeth Warren. See Letter from Senator Elizabeth Warren to the DOJ Acting Assistant Attorney General, opens new tab (Feb. 19, 2025).
Beyond the eventual fate of Fubo and the live pay TV industry, Judge Garnett's two opinions signal potentially greater judicial skepticism of both horizontal competitor JVs and bundling more broadly. It remains to be seen if these decisions were fact dependent or the start of a growing trend.
Notably, from the ashes of Venu came MySports, a $69/month sports-only package from DirecTV containing many of the channels Venu would have included. This emphasized the continued malleability of the live pay TV industry, and it remains to be seen whether or to what extent antitrust law may play a role in such future shifts.