The television and entertainment industries are in a state of flux. Legacy media conglomerates are fighting for their financial survival and exercising their substantial power in the industry to keep stockholders happy and stay afloat. In doing so, they are pulling their resources together from across their corporate structures as well as collaborating with competitors, something that would never have been imaginable in previous entertainment generations. However, these decisions are putting even more pressure on smaller members of the industry and the partners that they have relied on for decades. The question is, whether these unprecedented moves to consolidate are anti-competitive, or if they are actually giving consumers better options to get the entertainment that they want at a better price. On Thursday, eight companies and organizations sent a letter to Congress urging representatives to investigate the quickly shifting competitive landscape in pay TV.

Key Details

• Eight signatories sent a letter to two congressional committees calling for hearings over the joint venture streamer.
• Two congressmen have already requested information about Disney, Fox, and Warner Bros. Discovery’s joint venture.
• The letter says that the pay-TV ecosystem is at an “inflection point” that requires congressional involvement.

Last month, two members of Congress asked Disney, Fox, and Warner Bros. Discovery to provide information on their planned joint venture that will unite all three companies’ sports programming on a single streaming service. Reps. Jerry Nadler (D-NY) and Joaquin Castro (D-TX) had asked for details about JV in order to fully understand its impact on competition in the pay-TV sector. The representatives’ request was for the three industry leaders to supply that information by the end of April. As of now, there has been no indication whether or not Disney, Fox, and WBD met that non-binding deadline.

However, on Thursday, eight co-signers — including Fubo, DIRECTV, Sling TV parent company DISH Networks, NewsMax, and four public interest groups, sent a letter congressional leaders encouraging them to further investigate the future of pay-TV competition by holding hearings on the subject.

“Recent developments in the pay-TV market – including the programming giants’ new joint venture (“JV”), a streaming TV service that would control 80% of national live sports broadcasts – raise serious competition concerns that call for Congress’s immediate oversight,” the letter said.

The letter was sent to the chairs and ranking members of the Senate Commerce Committee and the House Energy & Commerce Committee; Nadler is the ranking member on the latter. In addition to the requests from Congressmen Nadler and Castro, the Department of Justice has also indicated that it would be looking into the forthcoming streamer to determine if it poses any anti-trust concerns for the American people.

The co-signers argue that due to the breadth and depth of the companies’ collective sports rights, that their collaboration represents an existential threat to drive competitors out of the industry altogether, adversely impacting consumers. The letter cites previous, including the 1992 Cable Act, in which Congress has stepped in and legislated safeguards to keep the public’s interest in mind, but not allowing a new evolution of the pay-TV industry to eliminate competition.

“The JV between Disney, Fox, and Warner is expected to launch this fall, in time for the next NFL and college football seasons,” the letter say. “In addition to controlling 80% of all national live sports broadcasts, the JV will control approximately 55% of all live sports (regional and national). We cannot think of any scenario in the history of the United States where consumer interests have been served when such an important industry – here, access to live sports – is effectively controlled by three programming giants which decided to combine forces instead of competing against each other.”

While it likely doesn’t impact the co-signers’ overall point, the percentages cited are based on the current media rights deals owned by the media giants involved in the joint venture. But, there is growing concern that WBD is in danger of losing it substantial portion of the national NBA rights to Comcast and NBCUniversal. If Warner Bros. Discovery is unable to retain a portion of the league’s broadcast rights, that does bring into question the viability of such a platform.

Nonetheless, the letter’s co-signers argue that should the JV be allowed to move forward as planned, it will eventually consolidate power in the sports broadcasting world driving all competitors off of the playing field. While NBCU and Paramount — neither of which is involved in the streamer — still possess a significant portion of national college and professional sports rights, as does Prime Video, which reportedly will join ESPN in the NBA's next broadcast deal, and should Diamond Sports Group emerge from bankruptcy proceedings, regional sports network (RSN) content from the company’s Bally Sports channels will arrive on the Amazon streamer in some form in the future, thanks to an investment in struggling broadcaster.

Even with major domestic sports leagues increasingly diversifying their stable of broadcast partners in order to reach as many viewers as possible and increase competition for deals, Fubo and the other co-signers believe that the consolidation of ESPN, Fox, and WBD’s rights will lead to a less competitive, and more expensive, sports-viewing experience for fans.

“Worse yet, these same programming giants enforce anticompetitive and inflationary contract restrictions on distributors that will insulate the JV’s streaming service from head-to-head competition because these contract restrictions prohibit competing distributors from offering consumers their own “skinny,” live sports bundle,” the letter says. “However one measures it, the JV will eventually dominate the distribution market for live sports and will drive out competition, leaving consumers captive to the JV for live sports – unless Congress and regulators intervene.”

This is not the first legal maneuver that Fubo has made in order to try and prevent the planned launch of the JV. In February, the sports-focused streamer filed an anti-trust lawsuit against Disney, Fox, and WBD, which was supported, but not joined, by DIRECTV and DISH. Fubo CEO David Gandler has been increasingly aggressive in his rhetoric against the JV companies, calling their collaboration a “sports cartel” and saying that his company’s efforts to stop the streamer’s launch is a “duel to the death.”

Fubo’s issues with Warner Bros. Discovery only intensified this week as WBD pulled 19 stations off of the streamer when the two sides could not arrive at a new carriage deal. While the channels do not air sports content, Fubo claims that WBD demanded carriage fees far over the going industry rate. This is a charge that Gandler has levied at all three of the JV’s participants in the past. Fubo also indicated that it had broached the subject of bringing WBD-owned TBS, TNT, and truTV back into its programming fold — after dropping them in 2020 — but WBD’s price, as of now, is too excessive.

Fubo has also claimed that despite being a [live TV streamer] designed specifically at sports fans, content providers — including those participating in the joint venture — have required the platform to carry non-sports channels in order to have access to the sports content that it is aiming to provide customers. In doing so, these media powers are forcing Fubo to become something that it doesn’t want to be and preventing it from becoming a sports skinny-bundle, which the JV is now attempting to do. Channel bundling like this is not new, nor is it exclusive to Fubo. This is how the industry has operated for nearly the whole of the cable era.

Despite the legal maneuvering and congressional curiosity, Disney CEO Bob Iger has publicly stated that he does not believe that there is any reason to be concerned about the future of the joint sports streaming service. Shortly after the platform was officially announced, legal and industry analysts agreed, arguing that anti-trust laws are designed to protect consumers, not competitors. Currently, one month of service to Fubo costs at least $94.99 once all fees are factored in, but the price for the JV streamer is anticipated to be roughly $50 monthly.

“We are at [an] inflection point now,” the co-signers letter says. “The JV partners demand that their competitors offer ‘big fat bundles’ of programming (as described by Disney’s CEO) that include many unwanted but expensive channels, while their own JV service offers a much skinnier package consisting only of ‘must have’ sports channels. Americans love their live sports and entertainment, and they expect Congress to ensure competition and choice in accessing these shows. We thus urge you and your colleagues to hold hearings as soon as possible on the future of pay TV.