On December 13, 2024, Judge Margaret M. Garnett of the United States District Court for the Southern District of New York denied defendants’ motions to dismiss a sports streaming company’s antitrust suit challenging their programming distribution methods as well as their proposed joint sports streaming service.
FuboTV Inc. v. Walt Disney Co., No. 1:24-cv-01363 (S.D.N.Y. Dec. 16, 2024). Judge Garnett read the opinion and orders into the sealed record. The unsealed opinion and orders are still forthcoming and will further reveal the rationale underlying this setback for defendants.
Plaintiff, a U.S.-based streaming service that focuses primarily on delivering live sports streaming, filed the lawsuit in February 2024 to challenge a new sports-only streaming joint venture, Venu, established by Disney, Fox, and Warner Bros. Discovery. Plaintiff alleges that defendants violated the Sherman Act by unlawfully tying premium sports channels to other less in-demand content and artificially increasing the prices plaintiff currently pays through allegedly anticompetitive most-favored-nation (“MFN”) clauses with larger distributors. In addition, plaintiff alleges that Venu would violate the Clayton Act by creating a monopoly in sports streaming, effectively increasing defendants’ incentives to raise prices on third-party distributors, including plaintiff, and potentially driving plaintiff out of business. Defendants, for their part, assailed the lawsuit as an attempt by plaintiff to insulate itself from direct competition.
The Court issued a preliminary injunction in August, preventing defendants from moving forward with the joint venture during the pendency of the litigation. The Court, which did not reach the Sherman Act claims, found that plaintiff is likely to succeed on the merits of its claim that the creation of the joint venture would violate Section 7 of the Clayton Act by substantially lessening competition and restraining trade in the alleged live pay TV market. Defendants subsequently appealed the injunction to the Second Circuit, where the Department of Justice and several Democratic state attorneys general intervened in support of plaintiff. Now, Judge Garnett’s denial of defendants’ motion to dismiss is the latest roadblock to implementing this joint venture.
Defendants argued in their motions to dismiss that they lacked the requisite market power in sports programming for their current practices to raise legitimate antitrust concerns. They also defended their challenged bundling arrangements as “longstanding industry practice.” Plaintiff countered that defendants’ plan to make their new joint venture exempt from their bundling requirements is indicative of the harm to competition caused by bundling practices.
As for the MFN arrangements, defendants maintained that MFNs actually lead to lower prices and that plaintiff could not explain how the MFN terms one defendant has with other distributors leads to higher prices for plaintiff.
Plaintiff and defendants now will move forward with the full lawsuit and await the Second Circuit’s preliminary injunction decision.