Elizabeth Warren Asks DOJ to Investigate Disney Deal to Buy Fubo
The Democrat Senator wrote a letter on Feb. 19 to Omeed Assefi , acting DOJ assistant attorney general, asking the agency to look into the Jan. 6 deal that, if it closes, would have Disney merge its Hulu + Live TV business with rival Fubo to create a new holding company — of which Disney would own 70 percent — but keep Fubo CEO David Gandler at the helm.
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The merger ended Fubo's legal fight against Disney, Fox Corp. and Warner Bros. Discovery over the companies' now scrapped plan to create a Fubo rival titled Venu that would've been a streaming home for major league sports comprising rights deals pieced together from the three entertainment giants. Fubo had argued in a $1 billion lawsuit that Disney, Fox and Warners were trying to to exact an 'iron grip on sports content to extract billions of dollars in supra-competitive profits.'
Warren's letter argues that Disney looked to buy Fubo after facing legal roadblocks to creating its own joint venture sports service Venu. 'It is notable that, as recently as the beginning of January, Disney and Fubo were litigation adversaries, with Fubo citing a characterization of Disney as 'the final boss you must defeat after beating out all other media companies,'' Warren wrote. 'By acquiring Fubo, Disney's dominance would be even stronger.'
The now-scrapped sports streaming joint venture Venu, touted by Disney's Bob Iger, Fox's Lachlan Murdoch and Warner Bros. Discovery's David Zaslav, was initially unveiled in February last year with the aim to offer a package to consumers consisting of rights to the NFL, NBA, WNBA, MLB, NHL, NASCAR, UFC, PGA TOUR Golf, Grand Slam Tennis, the FIFA World Cup and more.
Fubo sued days after the announcement and won a preliminary injunction from a federal judge last August to temporarily block the venture. When Disney unveiled its deal in January of this year to buy Fubo, it included the stipulation that Disney, Fox and Warner Bros. Discovery pay $220 million to Fubo.
In Iger's telling, however, Disney had realized that after it started to work on Venu's launch 'the emergence of these skinnier bundles surfaced, and Venu's basically looked redundant to us.' The deal to control Fubo, he told analysts on a Feb. 5 earnings call, 'was a great opportunity for us to make ESPN available in multiple skinny bundles and then to actually merge the Hulu Live and the Fubo, essentially channel business as one. Because frankly, while we liked being in that business, it wasn't a core business to Hulu.'
Venu, which would've cost $42.99 per month, was officially scrapped four days after Disney made its Fubo deal.
If the Hulu + Live and Fubo merger closes it would create a company with 6.2 million subscribers. Others in the pay TV space that it competes in include Charter (13 million subscribers), Comcast (12.8 million subscribers), DirecTV/AT&T (9.7 million) and YouTube TV (9 million), per estimates from research firm MoffettNathanson.
Warren views the deal as an attempt by Disney to effectively corner the streaming sports marketplace. 'This proposed acquisition raises significant concerns under antitrust law, would give Disney increased market power and incentives to increase costs for viewers, and should be regarded as another data point in Disney's history of anticompetitive behavior,' the Senator's letter reads. 'I urge DOJ not to be fooled by Disney's attempt to purchase its way around antitrust law, and to closely scrutinize this proposed acquisition.'
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