DoJ to review ESPN-Fox-WBD sports streaming JV – report

The US Department of Justice intends to take a closer look at a proposed sports streaming bundle from Disney's ESPN, Fox and Warner Bros. Discovery (WBD) over potential antitrust concerns, Bloomberg reported late last week.

The DoJ will explore concerns that the JV might harm consumers, other media companies and sports leagues, but won't initiate its review until the joint venture is finalized, the report said, citing unnamed sources who are familiar with the process.

Word of a DoJ review arrived nearly two weeks after ESPN, Fox, and WBD announced they would develop and launch a streaming sports service that features content from all major sports leagues. That offering, slated to launch this fall, will effectively function as a virtual multichannel video programming distributor (vMVPD) by delivering more than a dozen channels, including ESPN, ESPN2, FS1, FS2, ABC, TNT, TBS and the ESPN+ premium streaming service. Pricing hasn't been announced, but industry watchers speculate that it could sell for up to $40 per month.

The proposed streaming bundle does not include Comcast's NBCU and Paramount Global, two media giants holding key streaming sports rights. Amazon (Prime Video) and Apple (Apple TV+) also hold certain sports rights for their respective streaming services. Comcast and Paramount are reportedly exploring a streaming partnership or joint venture.

Disney, Fox and WBD believe the venture will largely target existing pay-TV cord-cutters and consumers who have yet to subscribe to a pay-TV bundle. However, there are concerns among other distributors that the new sports streaming bundle will accelerate cord-cutting.

Including both traditional pay-TV providers and vMVPDs, the US pay-TV industry lost about 900,000 subscribers in Q3 2023, a worst-ever result for a third quarter, according to MoffettNathanson's latest Cord-Cutting Monitor report. Traditional pay-TV providers (cable, telcos and satellite TV providers) shed 1.97 million subscribers in Q3 2023.

Ahead of the DoJ's reported plan, FuboTV, a sports-focused vMVPD, has already outlined concerns about how the sports streaming bundle could impact fair market competition and potentially "dictate market terms." Meanwhile, ACA Connects, an organization that represents independent operators, also has concerns and is pressuring the DoJ to intervene.

DoJ unlikely to block or materially change the sports streaming JV – Levin

Blair Levin, a policy analyst with New Street Research, isn't surprised that the DoJ will investigate the joint venture but doubts that the DoJ will block or "materially change the combination."

"Such an investigation could provide a forum for private sector players hurt by the combination to assert what the harms will be," Levin explained Monday in a research note on the matter. "But we are skeptical that the DoJ will ultimately conclude that the new app creates harm to competition."

While the JV might reduce options for sports leagues to sell their rights, the members of the JV "all continue to have their own brands and distribution options," and the sports rights will remain independent, Levin added. "The allegations may be true, but it may be that the reduction in options does not materially affect the leagues."

Levin, a former FCC official, has previously held that it's unlikely that the proposed JV will receive any direct action from Congress or the FCC but suggested that various "hurt" parties could seek government intervention.

He also viewed a potential antitrust review as the "greatest risk" faced by the JV.