Fubo sues Disney, Fox and WBD over proposed sports streaming bundle

Days after signaling it had issues with a proposed sports streaming joint venture from Disney, Fox, and Warner Bros Discovery (WBD), Fubo has sued, claiming that the trio and its affiliates are violating antitrust practices.

The complaint (PDF), filed today with the US District Court Southern District of New York, alleges that the proposed JV will harm competition and inflate prices for consumers while also arguing that Disney, Fox and WBD have stolen from Fubo's own playbook.

Fubo, a virtual multichannel video programming distributor (vMVPD), was launched in 2015 as a soccer-focused subscription streaming service. It later evolved to become a broader, "sports-first" pay-TV service. Along the way, Fubo aimed to integrate its pay-TV service with an integrated sports betting service but later scuttled that effort. Fubo ended Q3 2023 with 1.47 million subscribers.

Earlier this month, ESPN, Fox and WBD announced a plan to develop and launch a streaming sports service that features content from all major sports leagues by bundling together more than a dozen channels, including ESPN, ABC, FS1, TNT, ABC, TBS and the ESPN+ premium streaming service. They intend to launch the sports streaming bundle this fall at a price to be announced (some analysts expect it to cost around $40 per month).

The proposed JV is already facing some static. Bloomberg reported last week that the US Department of Justice plans to review the offering over potential antitrust concerns but will wait until the JV is finalized.

Fubo claims it has been blocked from offering packages envisioned by the JV

Fubo's complaint centers on channel bundling requirements, alleging that Disney, Fox and WBD have used their power to force Fubo to broadcast "unwanted, expensive content" that prevents the streamer from offering sports-centric packages that its customers want.

Fubo claims it has been blocked from offering the same package that the JV is developing and is instead required to license and distribute the "vast majority of their content to virtually all Fubo subscribers as a condition of receiving any of their content."

"Simply put, this sports cartel blocked our playbook for many years and now they are effectively stealing it for themselves," Fubo CEO and co-founder David Gandler said in a statement.

Fubo's suit seeks to enjoin the proposed joint venture, to require Disney, Fox and WBD to provide "parity of licensing terms" and for the trio to pay "substantial damages."

Disney and WBD declined to comment on the lawsuit. Fox has been asked for comment.

Fubo: We're forced to pay 'artificial, above market prices'

Fubo also claims that Disney, Fox and WBD impose "artificial, above-market prices and other economic terms on Fubo through a web of most-favored-nation ("MFN") clauses in their contracts with Fubo's competitors," including Disney-owned Hulu and Google-owned YouTube TV.

Those MFNs, which prevent Fubo from securing better terms than YouTube TV and Hulu, ensure that Fubo is forced to pay "artificially high rates," Fubo claims.

Fubo likewise claims that it is paying rates that are 30% to 50% higher for content from Disney, Fox, and WBD than other distributors are paying.

Such restrictive packaging and pricing requirements have impacted the value of Fubo, requiring the streamer to raise prices and drop some channels, the streamer said. Fubo points out that it was charging $35 per month for a basic package in 2017, but price hikes from ESPN and Fox have forced the company to raise it to $79.99 per month today.

Fubo also contends that Disney, Fox, and WBD are concerned that if Fubo grows too large, the company could threaten their pay-TV business. According to the complaint, a Disney exec told Gandler during a renewal negotiation that Disney did not want Fubo to become "the next Netflix."

Fubo also alleges that Disney, Fox and WBD also prohibit the streamer from offering key product features, including placing restrictions on Fubo's ability to offer customers certain DVR and video-on-demand features.