The Battle to Stop the Monopolization of Live TV Has Begun

Since the launch of cable television, bundling has defined the consumer’s experience. Expensive program packages have always offered a mix of broadly desired and niche programming. The opportunity to buy a slender package of channels tailored to our individual interests has always been out of reach. It was impossible to get what you wanted, without getting what you did not. These bundling requirements have long been dictated by the programming giants like Disney, Warner Bros., and Fox, who control several of the key channels that distributors like cable companies need to offer in order to remain viable.

From the late 2000s to the early 2010s, several on-demand internet streaming services like Netflix, Disney+, and HBO Max, many of which are owned by those same programming giants, came about to offer cheaper access to narrower sets of content, though they rarely offered meaningful options for viewing the live programmatic content available on cable. Then, as more and more consumers sought to have their media delivered over the internet, the advent of live programmatic internet streaming services like Fubo and Sling TV helped recreate the experience of traditional cable. While those services initially innovated, offering slender and specialized live viewing experiences, in recent years they have suffered the same bundling issues that defined the cable industry.

The key to understanding the evolution of television markets is sports. Sports is by far the most popular form of live broadcast entertainment. And because well over 90% of televised sporting events are consumed live in real time, and because consumers have demonstrated a much higher willingness to pay premium rates for live sports content over live television programming, sports are broadly understood as the linchpin of linear television markets. And while no love has been lost between traditional cable providers and live programmatic streaming services, their shared ability to leverage sports contents’ unique appeal has allowed both industries to remain viable for now. (Though cable providers continue to lose market share to live programmatic streaming services with each passing year.) This is despite the longstanding costly licensing deals and onerous channel bundling requirements imposed on them by the large programming giants, namely Disney, Warner Bros. Discovery, and Fox.

Local television stations, which largely rely on carriage fees from redistribution through cable providers, stand to face massive hits to their bottom lines—a loss that could have profound consequences for the broadcast journalism that often serves as the only source of news in information deserts around the country.

This status quo, however, is unstable, largely due to the ongoing pressure on programmers to unbundle popular sports. In that light, the announcement of a new partnership between Disney, Warner Bros. Discovery, and Fox on a sports-centric live programmatic streaming service, Venu Sports, may sound like a revelation to the average consumer. But as demonstrated by a case seeking to block the new partnership brought by Fubo—another live programmatic streaming service—the launch of this service may determine whether the live television market of the future includes a robust number of distributors, or is controlled entirely by programming giants Disney, Warner Bros. Discovery, and Fox.

While sports fans may be eager to finally be able to access the narrow product they have long desired, a monopoly over live sports offerings threatens to harm consumers broadly by driving out any potential distribution competitors to the programming giants. These giants, which also control large swaths of other pieces of the media industry (including Disney’s direct ownership of live programmatic service Hulu + Live TV), control the distribution rights of over 80% of national live sports broadcasts, and over 50% of the cumulative national and regional sporting events rights. With that market power, these giants could destroy what remains of the cable television market and stifle competition in the market for live programmatic streaming services before it fully gets off the ground.

Fubo argues as much in their complaint. Fubo, which launched in 2015 as FuboTV, has a particularly strong case to make against why the coercive practices imposed by the programming giants should be cause for grave alarm among antitrust authorities. In their case, they recount their decade-long effort to negotiate such a sports-centric streaming service with the programming giants. While initially successful, the company claims that it quickly faced resistance once its model gained steam.

In a section of the complaint titled “The Empire Strikes Back” (a jab at lead defendant Disney’s vast media empire, which includes the Star Wars franchise) the company claims its rapid early growth was quickly squashed by the programming monopolists, which Fubo claims used more burdensome bundling requirements as well as a series of kickbacks and most-favored-nation clauses with non sports-centric live programming streamers (including Disney’s Hulu + Live TV) to make Fubo’s preferred packages economically inviable. With these onerous requirements still in place and the launch of Venu Sports imminent, the company claims it may soon be forced out of business altogether. That existential concern led Fubo to seek a preliminary injunction stopping the launch of the partnership, which is being heard from August 6 through August 9, with a decision expected within a few weeks’ time.

While Fubo’s story is uniquely galling, it is far from alone in its worries about the ripple effect the launch of the joint venture could have on sports leagues and the entire live television ecosystem. Local television stations, which largely rely on carriage fees from redistribution through cable providers, stand to face massive hits to their bottom lines—a loss that could have profound consequences for the broadcast journalism that often serves as the only source of news in information deserts around the country.

The very sports leagues whose content stands to be distributed by the new joint venture have also expressed alarm at the prospect the three giants may begin bidding for licenses as a unit, which would drastically reduce the number of license buyers in the market and potentially kneecap licensing revenue growth. And satellite television providers Dish Network and DirecTV, which have long sought greater flexibility over their channel offerings, have filed affidavits in the case supporting Fubo’s claims. ACA Connects—a trade group representing hundreds of small and mid-sized broadband, video, and phone providers who often but heads with the satellite giants—also released a scathing statement about the deal.

The Department of Justice and federal lawmakers have heeded those cries, and have promised to scrutinize the terms of any final deals once they are released—though they have expressed frustration over the programming giants’ ongoing refusal to answer basic conflict of interest questions mere months before Venu Sports is expected to launch.

Despite this broad coalition of opponents and skeptics, Fubo’s case for a preliminary injunction remains marred by uncertainty. Even though they present many of the same practical anti-competitive challenges, federal courts have historically been reluctant to police joint ventures with the same force as full-blown mergers. Should the programming giants successfully squash a preliminary injunction, it is uncertain whether federal enforcers and the potential jurors Fubo has asked to decide the case can muster the will to put the cat in the bag, especially if Venu Sports’ competitors suffer the swift devastation they claim is likely. What is certain, though, is that as the hearing over the new service’s launch unfolds this week, the entire live entertainment industry is tuning in.