Two ranking members of Congress have sent a follow-up letter to the chief executive officers at Fox Corporation, the Walt Disney Company and Warner Bros Discovery (WBD) asking for more information about their development of Venu Sports, a streaming service that will offer live access to sports from their broadcast and cable channels.
Earlier this month, Representative Jerrold Nadler of New York and Representative Joaquin Castro of Texas said they appreciated a response from attorneys representing the three companies that was sent after the lawmakers issued their first letter on the matter, but complained that the responses didn’t go far enough to alleviate concerns that Venu Sports could stifle competition in a way that harms cable TV companies and sports fans alike.
As described, Venu Sports will include broadcast and cable networks from Fox, Disney and TNT Sports, including local Fox and ABC affiliates, Fox Sports 1, ESPN, TBS, TNT and Tru TV. The service is expected to cost around $50 per month when it launches in August; the price is far less than what cable and satellite companies charge for the same channels.
The product is unique in that it won’t carry non-sports networks owned by the broadcasters, which means customers won’t have access to channels like CNN, Fox News, Disney Channel, FX, HGTV or Animal Planet. By comparison, cable and satellite companies are typically forced to carry those non-sports channels as part of distribution agreements with the programmers — something that has increased the cost of cable, satellite and comparable streaming services over much of the past decade.
In a letter dated April 29, lawyers representing the three broadcasters describe Venu Sports as a “pro-consumer, additive value option for sports viewers,” one that will increase “choice for consumers across America.”
“Nothing will be exclusive to the new streaming service,” the lawyers said, adding that the channels available through Venu Sports will continue to be available through “traditional cable, satellite TV and streaming video platforms” like Hulu and YouTube TV.
“The sports viewing marketplace has undergone significant changes over the last decade,” the lawyers assert. “We have seen new entrants outside of traditional media companies enter what is already a highly competitive marketplace, both in the acquisition and the distribution of sports content. Simultaneously, we have seen consumers opt not to purchase traditional cable packages, and instead choose among the expanding number of streaming options, and we are seeing digital services acquire and place highly rated live sports events on discrete platforms, leaving the sports-viewing experience increasingly fragmented and complicated for many consumers.”
Some of that fragmentation is occurring because of the decisions of the joint venture stakeholders. ESPN, for instance, relegates some premium sports programming to ESPN Plus, its standalone streaming service that costs around $10 per month. Likewise, WBD is distributing some live sports through Max, which starts at the same $10 per month. Fox does not operate a sports-inclusive, subscription-based streaming service.
“[Venu Sports] will be able to offer a product that not only addresses this consumer need, but will afford thousands of sports content creators access to discovery by viewers,” attorneys for the broadcasters said.
This month, Reps. Nadler and Castro said they appreciated the response from the media companies, but said the answers to their letter didn’t go far enough to fully satisfy their concerns.
“Your companies exert unmatched control over the entire sports media ecosystem,” the lawmakers said in a follow-up letter reviewed by The Desk. “Without care, your joint venture has the potential to reshape this already-concentrated space to the detriment of consumers, sports leagues, and third-party distributors.”
Document: Read the follow-up letter sent to Venu Sports stakeholders [Pro Access]
The lawmakers have sent a new list of seven questions that seek information about how the broadcasters intend to make their channels available through Venu Sports, and whether there will be “firewalls” to prevent “collusion” between the three parties.
The representatives also want to know “what measures the Joint Venture Partners will implement to prevent interlocking directories, how the pricing of the Joint Venture will be determined and when it will be announced” and information about the programming partnerships Fox, Disney and TNT Sports have with major league organizations.”
The lawmakers have asked the three companies to send a copy of their responses to the U.S. Department of Justice when they submit their second letter to Congress in the near future.
“We urge your companies to provide Congress and the public with more information to allow the full impact of the proposed streaming service to be evaluated,” the lawmakers wrote.
