DOJ, 16 AGs Want Disney-Fox Cartel Blocked

The Department of Justice and 16 state attorneys general filed briefs agreeing with a federal judge's decision to temporarily block the launch of a new streaming service combination by media giants Disney, Fox, and Warner Bros. Discovery.

In February of this year the three media players announced their plan to combine their key live sports assets including Disney’s ESPN, Fox’s Fox Sports, and WBD’s TNT Sports.

The new streaming service called Venu would bundle the sports channels of the trio, forcing consumers who want their content to purchase a subscription at a price the cartel sets.

Critics of the deal cried foul, saying the move would limit competition and increase pricing for consumers.

The combination could give the Disney-Fox-WBD sports cartel near dictatorial control over streaming services and perhaps cable/TV systems because such content is critical for their existence.

In August, U.S. District Judge Margaret M. Garnett in New York agreed with Fubo, a streaming service that filed a lawsuit against the partners of the new platform, Venu Sports, claiming that the service would involve violating federal antitrust laws.

Venu was to have launched this fall, showing professional sports content from the National Football League, National Hockey League, the National Basketball Association, along with other sports content owned by the combination.

The Sports Fan Coalition, reporting the briefs that have been filed, noted that it, the America Economic Liberties Project, Electronic Frontier Foundation, Open Markets Institute, and Public Knowledge, filed an amicus brief supporting Fubo's lawsuit.

The Venu Sports partners have appealed the injunction, after which the American Antitrust Institute, the Center for Democracy and Technology, and the National Consumers League, also joined with Fubo.

The DOJ's brief, by Assistant Attorney General Jonathan Kanter and others from the attorney general's office, argues that Garnett's decision should be affirmed, and said that Venu's argument that forcing large bundles on fans isn't anticompetitive, is a "red herring."

"This appeal is about a claim that Defendants' creation of Venu — indisputably concerted action — violates Section 7 of the Clayton Act," the brief said. "Section 7's purpose is to 'arrest incipient threats to competition which the Sherman Act did not ordinarily reach.'"

The brief further argues that Fubo will likely succeed in a trial against Venu.

"As the district court found, 'the current live pay TV market is highly competitive,' with numerous distributors offering packages of television channels to consumers," Kanter wrote. "Venu would lessen that current competition by giving Defendants a path to collective dominance and foreclosing Venu's rivals. That is paradigmatic Section 7 harm."

Meanwhile, the 16 state attorneys general focused on the claims made by the Venu partners, which they called "erroneous," saying they have "no duty to deal."

The rules under "duty to deal" say companies with significant market power could be required to distribute products or services to competitors to maintain market competition while preventing anti-competitive behavior, the SFC noted.

Garnett ruled this "duty to deal" defense was not valid, and the state attorneys general agreed, writing that the "doctrine applies only to certain types of unilateral conduct challenged under Section 2 of the Sherman Act and does not apply to joint conduct like the launch of Defendants' joint venture here."

The attorneys general added that the district court properly rejected the defendants' defense, stating that they would violate Section 7 of the Clayton Act "if it substantially lessens competition in the relevant market."

The state attorneys general joining the brief were from the states of New York, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Washington, DC.