ESPN, Fubo Push Dueling Arguments in Streaming Antitrust Case

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In a 43-page filing Wednesday, attorneys for Walt Disney, ESPN and Hulu urged Judge Margaret Garnett of the Southern District of New York to dismiss FuboTV’s antitrust case over what the streaming service contends are unlawfully restrictive terms. Two other defendants, Fox and Warner Bros. Discovery, filed their own motions to dismiss Wednesday.

The moves came a day after Fubo attorneys asked Garnett in a 35-page brief to issue a preliminary injunction that would block Disney, ESPN, Fox, Warner Bros. Discovery and Hulu from launching a joint venture streaming platform this fall that Fubo says will control at least 54% of U.S. sports rights.

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The legal battle over the future of the live sports streaming industry is heating up.

Fubo sued in February, claiming the defendants’ streaming platform would lessen competition in the marketplace for sports program licensing and for streaming live pay TV. As Fubo sees it, the defendants use their excessive control over “most of the sports broadcast into American living rooms and screens” to overcharge for content licensing and to manipulate prices.

The defendants are also accused of employing bundling policies that compel consumers to purchase a separate product (in antitrust law, that practice is known as “tying”). Fubo contends it is forced to carry expensive, non-sports channels in bundles as an unwanted condition to carry sports channels and their customers pay more a result. The company bemoans its offerings increasingly “resemble the bloated cable packages of old” and that its minimum package has grown to 185 channels.

Disney, ESPN and Hulu not only flatly deny Fubo’s assertions but depict them as economically and legally illogical.

In their motion to dismiss, the trio insists Fubo has sued them “to insulate itself from competition” and that a victory for Fubo would “eliminate a potential rival” in the form of the streaming platform. The defendants suggest Fubo wants the court to block their platform because consumers will simply find it a more appealing option than Fubo and similar providers.

“By Fubo’s estimate,” the defendants argue, the streaming platform “will offer a package of certain networks allegedly at just $30–50 per month, introducing a new, multichannel, live streaming TV option for consumers, and thus increase competition.”

They also denigrate Fubo’s theory of harm as “implausible” since they are incentivized to license content to reach as many viewers as possible—a task that would be made more difficult with higher prices.

Disney, et al., also reject the notion they are legally “obligated to give Fubo better prices” or even “to deal with Fubo at all.” They underscore Fubo has agreed to pay prices “in arms-length negotiations” and contend it would be irrational to charge Fubo lower prices simply because Fubo would prefer to pay less than it is willing to pay.

Fubo’s motion for a preliminary injunction tells a very different story. The company says the defendants are attempting to suppress virtual multi-channel video programming distributors, which sell live TV (and other licensed content) over a broadband connection “with more flexible packages and lower prices” than more traditional providers. Fubo complains the streaming service “will feature just 15 channels, all featuring popular live sports—the kind of skinny sports bundle that Fubo has tried to offer for nearly a decade.”

If Garnett is unwilling to issue an injunction against the joint venture, Fubo asks that she at least enjoin the defendants “from enforcing the contractual restraints that insulate their cartel from competition.” Garnett will review the arguments on the competing motions and possibly hold oral arguments.

The case is partly about the economic impact on consumers of something that hasn’t yet occurred: the release of the steaming platform. The two sides offer radically different predictions about impact on consumer prices and choices. Which set of predictions proves more persuasive on the court will play a major role in determining the outcome of the case.

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