Disney, Fox, Warner Bros. Discovery Have Collectively Invested Over $1.2 Billion in Venu Sports
The expensive streamer could still come to naught if Fubo’s lawsuit against the joint venture is successful.
What would you do if you had $400 million? For Disney, Fox, and Warner Bros. Discovery, the answer is “challenge the pay-TV marketplace with a new streaming service.” That service is, of course, the joint venture live TV streaming platform Venu Sports, which will combine 14 sports-related channels owned by the three companies on a single service. Representatives for the three companies were in court this week, defending the streamer against a request for a preliminary injunction from Fubo, which is trying to stop Venu from hitting the market with an antitrust lawsuit. As part of his testimony, one Fox official said that the three companies have spent $400 million each on the service so far, which makes the stakes in the suit for everyone involved abundantly clear.
Key Details:
- Hearings continue this week to determine if Fubo’s request for a preliminary injunction against Venu will be granted.
- Disney, Fox and WBD agreed to a noncompete clause for 36 months after the launch of Venu.
- ESPN internal data shows that Venu is likely to draw a good portion of its customer base from current pay-TV offerings like Fubo.
The injunction hearing in Fubo’s lawsuit against Venu was originally scheduled to end on Friday, but will now carry over into Monday. Judge Margaret Garnett will take post-proceeding motions after the hearing ends, which means her final decision on whether to grant the injunction may or may not be handed down next week.
As the hearing has progressed, however, more information has come to light. According to Front Office Sports, Fox chief operating officer John Nallen testified that the three companies had already invested $400 million each in Venu, bringing the total to $1.2 billion. He also said they each planned to infuse $15 million more into the service’s marketing budget in its first year.
The $400 million figure is obviously a big number and shows how serious the three companies are about making sure that Venu is ready to go at launch. It also underscores the risk involved; if Venu never makes it to viewers, that money will have essentially been thrown down the drain. That would be an especially heavy blow to WBD, which continues to struggle financially as it tries to make streaming profitable while its cable channels bring in less and less revenue.
Other interesting revelations from this week’s testimony include the disclosure that Fox had discussions with both Disney and WBD about forming two-way joint ventures. Disney and Fox’s discussions centered around a service that would cost $22 per month and would have a potential audience of 30 million, while a WBD and Fox joint service would attract around 15 to 20 million subs.
Also, ESPN chairman Jimmy Pitaro revealed that the three companies signed a non-compete clause for 36 months after the launch of Venu. Pitaro called this a “compromise,” saying ESPN did not want such a clause, but that the other two companies insisted because they feared the channel could enter into similar JVs with NBC or CBS.
Venu Sports
Venu Sports is the planned live TV streaming service offering sports from ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, ABC, FOX, FS1, FS2, BTN, TNT, TBS, and truTV. Programming from ESPN+ and on-demand content will also be available. Users will be able to watch NFL, NBA, MLB, and NCAA games. Subscribers can bundle the product with Disney+, Hulu, or Max. Venu’s launch is on hold thanks to a preliminary injunction.
Where Will Venu’s Customers Come From?
Disney CEO Bob Iger said in March that Venu’s target audience was not customers who already had pay-TV subscriptions, but rather was intended to attract cord-cutters and cord-nevers — customers who had either already canceled their cable plans or had never signed up for pay TV in the first place.
But data shared by Aluma in May showed that Venu did indeed have the power to disrupt the pay-TV marketplace. It found that 38% of current pay-TV subscribers said they would be at least somewhat likely to subscribe to Venu, and that number likely jumped higher when the $42.99 monthly introductory price point was announced last week. That’s less than half the price of a streamer like Fubo, and as revealed at this week’s hearings, Disney, Fox, and WBD know that their service has the potential to leech customers away from Fubo and other cable channel distributors.
Pitaro reiterated that the companies don’t want to sap too many customers away from Fubo and its competitors, because they make plenty of money from the carriage fees these companies pay to carry their channels. But Fubo’s representatives pointed to internal ESPN research from January that showed up to two-thirds of Venu’s projected 5 million customers would be customers who currently have a pay-TV subscription, which Pitaro was forced to concede.
Fubo’s suit against Venu argues that the three companies behind it are violating antitrust laws by not allowing cable distributors to create slimmed-down packages with only sports channels, and forcing them to carry less-popular networks in order to get channels like ESPN, FS1, and TNT. If it wins its request for a preliminary injunction, Venu will almost assuredly not launch as intended in fall 2024, and may never hit the market at all.
Fubo
Fubo is a live TV streaming service with about 90 top channels that start at $79.99 per month. This plan includes local channels, 19 of the top 35 cable channels, and regional sports networks (RSNs). In total, you should expect to pay about $94.99 per month, after adding in their RSN Fee. Fubo was previously known as “fuboTV.”