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Welcome to The Corner. In this issue, we explain the importance of streaming television service Fubo’s lawsuit against three major entertainment companies poised to monopolize the live sport programming market with a new venture.
New Sports Streaming Venture Paves Way for Monopolization of Live TV
Austin Ahlman
It has long been hard for consumers to buy just the television programing they want. Sure, if you want to watch, say, your beloved hometown sports team play live, that’s long been available through cable television and more recently through streaming services. But to enjoy that viewing pleasure, you have almost always have to buy an expensive package that includes all sorts of niche channels of little or no interest to most consumers. For awhile, a few innovative internet streaming services like Fubo and Sling TV found a niche by offering narrower packages.
Now, Venu Sports, a new joint venture by the entertainment giants Disney, Warner Bros. Discovery, and Fox, promises to offer sports fans a product that gives them exactly what they want and nothing more. Fubo, however, along with a growing array of critics, say the deal threatens to accelerate already severe monopoly problems in this sector in ways that will ultimately leave consumers with fewer choices and even higher prices.
The problems begin with the fact that Venu Sports will start off controlling 80 percent of the national market for live sports broadcasts. With that market power, it will be able to negotiate programming deals with sport teams that offer consumers the unbundled products they want, but it will also mean that virtually no other players will be able to stay in the game.
This is the argument of a complaint brought by Fubo, which is set to be heard in the southern district of New York starting August 7. Fubo, which launched in 2015 as FuboTV, has a particularly strong case to make for why the coercive practices imposed by the programming giants should be cause for grave alarm among antitrust authorities reviewing this deal. In their case, they recount their decade-long effort to negotiate 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 who used burdensome bundling requirements as well as kickbacks 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.
Fubo is far from alone in its worries about the ripple effect the launch of the joint venture could have on both sports fans and sports leagues, and ultimately the entire live entertainment ecosystem. The 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.
Satellite television providers Dish Network and DirecTV have also filed affidavits supporting Fubo’s claims. ACA Connects—a trade group representing hundreds of small and mid-sized broadband, video, and phone providers who often butt heads with the satellite giants—also released a scathing statement about the deal. In May, Open Markets Institute partnered with several of these stakeholders as well as other allied organizations on a letter to Congressional leaders raising these concerns.
The Department of Justice has promised to scrutinize the terms of any deal once they are released. At the same time, federal lawmakers have expressed growing frustration over the programming giants’ ongoing refusal to answer basic conflict of interest questions mere months before Venu Sports is expected to launch.
📝 WHAT WE'VE BEEN UP TO:
- Open Markets Institute’s legal director Sandeep Vaheesan published an op-ed in The New Republic calling for publicly owned energy, which already accounts for a quarter of America’s customers, to help solve the country’s energy crisis as it faces extreme weather brought on by climate change. “In lieu of piecemeal, private-led development of zero-carbon energy, imagine well-paid workers constructing wind farms, solar arrays, geothermal stations, and storage projects across the country and connecting them together into
a national grid that delivers zero-carbon energy to all points,” Vaheesan wrote.
- The Seattle Times published an article by Center for Journalism and Liberty director Dr. Courtney Radsch arguing for a fair compensation framework for news publishers whose content is being mined to help develop AI large language models. “To adapt their business models for the AI era, news publishers need to demand their rights and work collectively to put a figure on the value of journalism to artificial intelligence systems and assess the threat posed to future revenue and business models,” she wrote. Her article was quoted in the Charting GenAI Substack newsletter.
- OMI’s strategic councilor on democracy and power Caroline Fredrickson published an article in the Washington Monthly decrying the Supreme Court’s recent ruling on presidential immunity. “Despite the radicalism of the Roberts Court, few legal scholars anticipated how far the decision would go toward giving Trump everything he wanted and expanding the powers of the presidency,” Fredrickson wrote. She also spoke about the ruling on the Bloomberg Intelligence podcast.
- The Brookings Institution cited Open Markets’ Europe director Max von Thun’s recent article in ProMarket, which dismissed the notion of creating European champions. Brookings writes, “Von Thun used the United States as an example of the harms of consolidation in the defense and telecommunications sectors specifically and argued that, beyond high prices, consolidation causes harms in the form of weaker resilience, less innovation, and reduced investment.”
- Open Markets’ executive director Barry Lynn was quoted in an article in The Verge dismissing vice presidential nominee J.D. Vance’s ostensible antitrust credentials. “VPs don’t set policy, presidents do,” Lynn said. “Bottom line is that Trump’s policies would destroy the federal government as we’ve known it since The Interstate Commerce Act of 1887. And if you don’t have a functioning federal government, you can’t enforce antimonopoly law.”
🔊 ANTI-MONOPOLY RISING:
- The Federal Trade Commission is investigating leading dialysis giants DaVita and Fresenius Medical Care over their consolidation of over 70% of U.S. dialysis clinics. Early reports indicate enforcers are reviewing whether the two firms’ use of noncompete agreements has limited patients’ ability to access cheaper and more convenient treatment options. (Politico)
- The UK’s Competition and Markets Authority is investigating Microsoft over its partnership with Inflection AI, which included a controversial move by the software giant to hire most of the startup’s staff. Several competition authorities around the world have increased scrutiny of Microsoft’s elaborate set of deals with leading AI technology corporations. (The Verge)
- A group of lawmakers led by Minnesota Senator Amy Klobuchar introduced a bill to require private equity firms and other institutional investors to report their purchases of single family homes, subjecting them to scrutiny by antitrust officials at the Federal Trade Commission and Department of Justice. The legislation would enable regulators to better track how these purchases are impacting increasingly strained local housing markets. (Bloomberg)
- The Competition Commission of India is the latest market regulator to find that Apple has abused its market position by limiting app store competition and imposing hefty fees on transactions within its ecosystem. (Reuters)
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📈 VITAL STAT:
$23 billion
The amount Google plans to pay for cybersecurity startup Wiz, making it the search giant’s largest-ever acquisition. While the deal may face antitrust scrutiny, Google, which is facing two antitrust suits by the federal government, is moving forward with negotiations. (New York Times)
📚 WHAT WE'RE READING:
Data Driven: Truckers, Technology, and the New Workplace Surveillance — Cornell professor Dr. Karen Levy pulls back the curtain on how digital surveillance is changing the work and lives of America’s long-haul truckers. Through a mix of first-person interviews, legal and regulatory analysis, and examinations of transportation and shipping corporations’ increasingly onerous monitoring policies, Levy’s book reveals how the new age of workplace surveillance is fueling desperation and burnout in drivers and stripping away the sense of autonomy that once defined the profession.
🔎 TIPS? COMMENTS? SUGGESTIONS?
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