August 07, 2024

Castro, Warren, Sanders Urge DOJ, FCC to Scrutinize New Sports Streaming Service From Fox, Warner Bros. Discovery, and Disney

View the Full Letter

WASHINGTON — This week, Congressman Joaquin Castro (TX-20) and Senators Elizabeth Warren (MA) and Bernie Sanders (VT) wrote to the United States Department of Justice (DOJ) and Federal Communications Commission (FCC), urging the agencies to closely scrutinize a proposed joint venture between Fox, Warner Bros. Discovery, and Disney subsidiary ESPN that would create a new streaming service called Venu Sports (Venu).

“This massive new sports streaming company would be poised to control more than 80% of nationally broadcast sports and more than half of all national sports content, putting it in a position to exercise monopoly power over televised sports,” the lawmakers wrote. “The market power of its three giant parent companies would enable it to discriminate against competitors and increase prices for consumers.”

Background: The cost of streaming services rose by nearly 25% in 2023 as a small group of companies captured viewership, bundled content, and raised prices to maximize profits. 44% of viewers in the U.S. also report that their streaming subscription costs increased over the last year amidst increased bundling and consolidation. The proposed Venu service would continue this trend by consolidating the sports programming of the global media companies with the second-, fifth-, and ninth-highest revenue streams.

Under the joint venture, other streaming platforms would have to negotiate with Fox, Disney, and Warner Bros. for access to major sports licensing rights while simultaneously competing with them to offer a competitive sports streaming service. Fox, Disney, and Warner Bros. would have a financial incentive to prefer Venu in negotiations with competitors, including by continuing to bundle sports channels with other less popular programming and effectively requiring competitors to buy the entire bundle, preventing them from offering cheaper deals to consumers. Although Venu is framed as a joint venture rather than a merger, its consolidation of the live sports market could raise concerns under both antitrust and telecommunications laws aimed at preventing excessive consolidation and protecting the public interest.

In this week’s letter, the lawmakers note that Disney has already been accused of this behavior, with the streaming platform Hulu using “significant licensing leverage to set a price floor and prevent competitors from offering cheaper, competitive bundles to consumers.”

“Using its extensive control of sports licensing rights, Fox, Disney, and Warner Bros. would be able to exert joint control over live sports from distribution through broadcast,” the lawmakers continued. “The risks of corporate consolidation that Venu promises will likely be borne by American sports viewers.”

“The description of this deal as a ‘joint venture’ should not prevent antitrust and telecommunications regulators from giving it the scrutiny it deserves,” the lawmakers concluded. “DOJ and FCC should closely scrutinize this transaction and take immediate action to block it if it violates antitrust law, or if it does not serve the ‘public interest, convenience, and necessity.”

Today’s letter follows previous concerns raised by Congressman Castro and his Congressional colleagues about the joint venture. In June, Congressman Castro and Congressman Jerrold Nadler (NY-12), the ranking member of the House Judiciary Committee, sent a letter to the chief executive officers of Fox, Warner Bros. Discovery, and Disney to seek more information about the proposed joint venture and express concerns that it could reduce competition and harm consumers. The letter follows a meeting in late May between the offices of the lawmakers and representatives for the joint venture partners that failed to satisfy concerns previously expressed by the lawmakers.