Eight co-signers representing streaming services, pay TV operators and public interest groups have sent a letter to Congressional leaders urging their Committees hold hearings on the future of competition in pay TV and the new streaming joint venture backed by Warner Bros Discovery, Disney and Fox Corp.
In the letter, the signees wrote that "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."
In response the three JV partner companies (ESPN, a subsidiary of The Walt Disney Company, FOX and Warner Bros. Discovery) defended the service in a statement saying: “The service is a pro-consumer offering to a segment of viewers who currently aren’t served. It will expand consumer choice by creating an incremental, nonexclusive option for this segment of viewers to watch their favorite sports.”
The letter criticizing the JV was signed by Fubo, Dish Networks, DirecTV, Newsmax and the public interest groups Sports Fans Coalition, American Economic Liberties Project, Electronic Frontier Foundation and Open Markets Institute.
The letter was sent to Senators Maria Cantwell, Chair, and Hon. Ted Cruz, Ranking Member Senate Commerce Committee and to Dick Durbin, Chair and Lindsey Graham, Ranking Member Senate Judiciary Committee.
It is also addressed to Congressional leaders, Cathy McMorris Rodgers, Chair and Frank Pallone, Ranking Member House Energy & Commerce Committee and Jim Jordan, Chair and Jerry Nadler, Ranking Member House Judiciary Committee.
“We are writing to urge your Committees to hold hearings on the future of competition in pay TV,” the letter said. “The JV between Disney, Fox, and Warner is expected to launch this fall, in time for the next NFL and college football seasons. 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.”
“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 continued. “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.”
“When one vertically integrated company has the power and incentive to drive out its competitors – as this JV will – policymakers have previously stepped in to protect competition and consumers,” the letter noted. “For example, in the 1992 Cable Act, Congress enacted new program access rules that prevented vertically integrated cable operators from discriminating against new entrants in the pay TV business, namely the then-nascent satellite TV providers trying to compete with cable.”
“We are at the same inflection point now,” the letter concluded. “The JV partners demand that their competitors offer “big fat bundles” of programming (as described by Disney’s CEO3) 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.”
In February, Fubo, filed an antitrust lawsuit against The Walt Disney Company, Fox Corp., Warner Bros. Discovery, Inc. and their affiliates, alleging that the vertically-integrated media companies have engaged in a years-long campaign to block Fubo’s innovative sports-first streaming business resulting in significant harm to both Fubo and consumers. The complaint alleges that the Defendants’ forthcoming launch of a sports-streaming joint venture steals Fubo’s playbook and is the latest example of this campaign.
The JV has produced mixed reaction from analysts who have worried it could accelerate cord cutting--something top Disney, Fox and WBD executives have disputed. As previously reported by TV Tech, broadcasters have also been split on the impact of sports streaming to their business.
