Earlier this year, Disney announced it would no longer team up with Warner Brothers Discovery and FOX to launch a new sports streaming service called Venu Sports. This service was going to combine all of the three companies’ sports brands into a new platform offering a skinny sports channel bundle.

Just days before that announcement, Disney also announced it would be making a major investment in Fubo TV to combine its Hulu + Live TV business with Fubo TV and become a majority owner of Fubo TV.  It was also revealed that Fubo TV would drop its lawsuit against Disney, WBD and FOX, which had been the reason behind the delay of the launch of Venu Sports.

The combined business will operate as Fubo and it will be  led by the existing Fubo management team; Fubo and Hulu + Live TV will continue to be available to consumers as separate offerings (though I suspect eventually Hulu+Live TV will merge into Fubo TV). 

When combined, Hulu+Live TV and Fubo TV have 6.2 million North American subscribers.  It will also be offering a new sports skinny bundle featuring Disney’s premier sports and broadcast networks.

As you might expect, this deal is subject to regulatory approvals and today, Senator Elizabeth Warren is urging the Department of Justice to “closely scrutinize” their acquisition of Fubo TV, especially as she had previously raised concerns about the launch of Venu Sports.

Disney’s proposed acquisition of Fubo appears to allow Disney to simultaneously circumvent the lawsuit while gobbling up a competitor. 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. 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

She went on to add:

“Disney’s acquisition of Fubo also threatens to eliminate substantial competition between current competitors, which could suggest the merger may substantially lessen competition.  Even if Fubo and Hulu + Live TV are offered as separate services (as the initial plan suggests), their common ownership virtually eliminates any possibility of true competition.”

Her letter to the DOJ also raised the issue of how Disney should own Fubo so it would continue to have more control of the market.

Disney’s acquisition of Fubo may also limit access to products that rivals rely on to compete, which could also threaten competition in violation of antitrust law.  If Disney owns Fubo, it will be financially incentivized to maximize subscriptions to that platform. Disney controls 26.8% of program licensing rights to American sporting events with a footprint in all of the big four sports — MLB, NBA, NFL, and NHL. Sports represent the backbone of the live TV market; vMVPD services are not considered viable without them.  If Disney takes control of Fubo, Disney will also control an estimated 35% of the vMVPD market. Given Disney’s control over sports rights, it may seek to limit competitors’ access to those rights through higher carriage costs or “bundling” requirements similar to those that were at issue in Fubo’s litigation.

In her closing statement, Senator Elizabeth Warren continued to request more questions to be asked of Disney’s purchase of Fubo TV.

Disney is already one of the most powerful media companies in the world.  Threatened by Fubo’s lawsuit and in an apparent attempt to keep Fubo from “becoming the next Netflix,”  Disney has proposed a plan to acquire its competitor, and, in the process become an even more powerful force in an already highly-concentrated market. DOJ powerfully pushed back on the attempt by Disney, together with Warner Bros. and Fox, to dominate the sports streaming market through Venu Sports. I urge DOJ to continue this work on behalf of viewers by closely scrutinizing this proposed deal and blocking it if it violates antitrust law. As the companies have acknowledged, the sports streaming market is rapidly changing. This uncertainty only underscores the need for antitrust enforcers to carefully assess the potential impacts this proposed deal will have on competition, the broader streaming industry, and millions of sports fans across the country.

Roger’s Take: One of the most interesting comments in this letter is how she thinks Disney is trying to stop Fubo from becoming the “Next Netflix”, which indicates to me that she possibly doesn’t really understand what’s happening with linear television and how the market is getting smaller, as people move from cable to streaming.  With YouTube TV getting even more popular, the combination of Hulu+Live TV and Fubo would still be behind. 

Plus, with the launch of the flagship streaming version of ESPN coming later this year and other cable companies also now offering skinny sports bundle, television is very different from a decade or so ago.  Plus, with the new political situation changing under the new administration, it’s unclear what issues might be picked up.

What do you think of Disney buying Fubo TV?  Let me know on social media!

Roger Palmer

Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom. Email: Roger@WhatsOnDisneyPlus.com Twitter: Twitter.com/RogPalmerUK Facebook: Facebook.com/rogpalmeruk

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