U.S. District Judge Margaret M. Garnett on Friday delayed Venu Sports’ launch until after 2025, granting FuboTV’s motion for a preliminary injunction to block Walt Disney, ESPN, Fox, Warner Bros. Discovery and Hulu from developing sports-centric streaming platforms.
The defendants plan to appeal Garnett’s ruling to the U.S. Court of Appeals for the Second Circuit, the Venu Consortium confirmed in an email. The ruling also does not end the case at the trial court level. Fubo filed the lawsuit in April, and the litigation in the Southern District of New York could continue for months or even years. Fubo’s shares rose 20% on the news, closing at $1.53 per share on Friday, up nearly 17%.
Venu Sports is expected to be released by this fall and will cost $42.99 per month. It will be a “skinny” bundle that brings together premium sports channels like ESPN, Fox Sports and SEC Network, along with mainstream channels that broadcast sports like ABC, Fox and TNT. While Venu Sports offers a wide selection, it won’t carry NFL games that air on CBS, NBC, Amazon Prime or Netflix, nor will it carry games that air on regional sports networks.
The ruling was good news for industry players, including DirecTV, which supported Fubo’s motion in court. “We are pleased with the Court’s decision and believe it appropriately recognizes the potential harm of allowing large programming companies to license their content to affiliate distributors on more favorable terms than they can license to third parties,” DirecTV spokesman John Greer said in an email.
Venu stakeholders said its product offers consumers more choice and that it will likely prevail in court. “We respectfully disagree and will appeal the court’s ruling. We believe Fubo’s arguments are flawed on the facts and law, and that Fubo has failed to demonstrate that it is legally entitled to a preliminary injunction,” an ESPN representative said in an email. “Venu Sports is a pro-competitive option designed to increase consumer choice by reaching audience segments not served by existing subscription options.”
By granting Fubo’s motion, Garnett has sent Venu Sports to the punishment box for the foreseeable future. Unless the appeal is successful and the case is resolved early or out of court, the injunction will remain in place at least until trial, which will likely not happen until after 2025. It’s also possible that the company behind Venu Sports will see this waiting period as incompatible with its business goals and discontinue the platform altogether.
Fubo overcame obstacles and persuaded Garnet to enjoin Venu Sports. A preliminary injunction is an unusual and drastic remedy under the law that requires, among other things, a showing of a substantial likelihood of success and that the parties would suffer irreparable harm without the injunction. Preliminary injunction hearings are held early in a litigation, before the opposing parties have been forced to fully share relevant evidence and testimony.
Fubo built its argument by portraying Venu Sports as a Trojan horse in which rival companies (Disney, Fox, and Warner Bros.) conspired to monopolize live sports content under the guise of offering sports fans something new and seemingly dynamic, each company doing so to increase their own profits and eliminate potential competitors.
Fubo further warned Garnett that the release of Venu Sports could put the company out of business, leaving sports fans with less choice and more money to pay for content. Fubo also complained that the Defendants do not give streamers the ability to offer their own sports bundles. Instead, the Defendants force streamers to bundle sports channels with entertainment channels and other bloated content that sports fans don’t want.
In his decision, Judge Garnett wrote that a 1981 case, United States v. Columbia Pictures, in which movie studios tried to create a cable channel that would provide exclusive access to new releases, “presents a scenario very similar to this case.” In Columbia Pictures, the court blocked the studios’ plans because their channel would reduce consumer choice and make it difficult for HBO, Showtime, and other cable channels to compete. Judge Garnett thought the Columbia decision was correct because it occurred “at a time of rapid change in the television and film industries” and because it limited the ways in which competing companies could compete through joint ventures.
The difference between the two cases that didn’t faze Garnett was that Columbia Pictures was dealing in movies that would air exclusively on the new channel, while Venu Sports would not offer exclusive content. Garnett also seemed to distrust the defendants, at one point saying: [they] “We vow that such price gouging and foreclosure will not occur in practice…. One of the purposes of antitrust injunctions is to prevent anticompetitive incentives from forming in the first place so that American consumers do not simply have to take their word for it and hope for the best.”
The defendants tried to convince Garnett that Fubo’s theory was flawed. They stressed that the content shown on Venu Sports would not be exclusive to the streaming service, and that Venu Sports’ backers would continue to license sports content separately and compete with each other. For example, sports fans have many different ways to get ESPN, and ESPN is set to launch its own streaming service, Flagship, next year.
Venu Sports also will not include sports content from other competitors, such as Peacock, NBCU, CBS, Paramount+, Apple TV+, RSNs, etc. As defendants argued, Venu Sports will be additive and pro-competitive in that it will provide fans with choices they do not currently have and will not take away from existing choices.
As for Fubo’s claim that it was denied the opportunity to offer its Skinny Sports Bundle, the defendants argued that that was legally irrelevant. They cited U.S. Supreme Court precedents to support the argument that antitrust laws do not mandate companies to negotiate with competitors or to offer certain prices or services.
On appeal, the Second Circuit will review Judge Garnett’s decision to grant a preliminary injunction against Hubbo under an abuse of discretion test. The judge’s ruling will be upheld to the extent that it is within the bounds of permissible rulings. The defendants will argue that Judge Garnett applied the wrong standard, misapplied the correct standard, made erroneous findings of fact, or committed other errors of law.
–With assistance from Kurt Badenhausen.
(This story has been updated with additional citations and details.)
