Congress Details Collusion and Consumer Privacy Concerns Over Venu Sports Streaming Venture in New Letter

Reps. Jerry Nadler and Joaquin Castro also asked for the methods Fox, Warner Bros. Discovery and Disney may use to determine pricing for the service

ESPN, Fox, Warner Bros. Discovery (Photo: Getty Images)

Congressmen Jerry Nadler and Joaquin Castro have sent a follow-up letter to Venu Sports partners Warner Bros. Discovery, Fox and Disney seeking more information on the bundle’s impact on access, competition and choice in the sports streaming market.

The follow-up letter comes after TheWrap exclusively reported that the lawmakers’ concerns were not satisfied after their staff met with representatives from the media giants on March 31.

“Although we appreciate your prompt reply and willingness to meet with our staff, your responses so far are insufficient,” the new letter stated. “Overall, we still have not received answers about the firewalls your companies may implement to  prevent collusion; the precautions you may take to ensure consumer privacy; or the methods you may use to  determine pricing of the new service.”

It added that the “vague assurances” the trio has provided strike them as “contradictory.”

“For example, we find it difficult to understand how your companies can both promise not to  share competitively sensitive information and also evaluate the success of the joint venture on a company-by company basis,” the letter continues. “Your repeated assertion that the details of the joint venture have not yet been finalized is also hard to believe, given that the joint venture is projected to roll out in mere months.”

The new letter asks for answers to seven questions no later than June 21 and asked that the Department of Justice be copied on the responses. The items include:

1. Identify the standalone plans each of the Joint Venture Partners has considered for making their sports channels available via streaming. 

2. If standalone streaming sports services are offered by the Joint Venture Partners, how firewalls will be implemented to ensure there is no collusion between the Joint Venture and their independent  streaming sports offers.

3. Whether the Joint Venture Partners will implement provisions to prevent anti-competitive sharing of  pricing or other competitively sensitive information with each other. 

4. What measures the Joint Venture Partners will implement to prevent interlocking directories.

5. How the pricing of the Joint Venture will be determined and when it will be announced.

6. What League Properties licensors, other than the Joint Venture Partners, hold the rights to.

7. As it pertains to the availability of sports channels and programing, how many hours of live events  for League Properties will be transmitted per calendar year on channels included in the new service.  

Nadler and Castro argue that the companies “exert unmatched control over the entire sports media ecosystem” and that without care, Venu has the potential to “reshape this already-concentrated space to the detriment of consumers, sports  leagues, and third-party distributors.”

“Considering the competition concerns, we urge your companies to reconsider your plans to forego a commitment to submit licensing negotiations to binding arbitration, as previous parties to vertical integration  transactions (e.g., Comcast-NBCU, AT&T-Time Warner) have done,” the pair’s letter concluded. “We ask that you see to efficiently and thoroughly address and answer these concerns promptly. We look forward to your response.” 

Representatives for Venu Sports declined to comment. Disney, Fox and Warner Bros. Discovery did not immediately return TheWrap’s request for comment on the new letter.

Venu Sports, which is on track to launch this fall subject to regulatory approval, will offer access to content from linear sports networks including ESPN, ESPN+, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, FOX, FS1, FS2, BTN, TNT, TBS, truTV, as well as the ABC network.

It will include content from the NFL, UFL, NBA, WNBA,  MLB, NHL, college football (including the College Football Playoff), men’s and women’s  college basketball (including the men’s and women’s college basketball national  championships), PGA golf, grand slam tennis, cycling, soccer, UFC, Formula1 and  NASCAR. Subscribers would also have the option to bundle the product with Disney+, Hulu and Max.

Fox, Disney and WBD will each own a 1/3 stake, have equal board representation and will license their sports content to the joint venture on a non-exclusive basis. Former Hulu and Apple executive Pete Distad will serve as Venu’s CEO, reporting directly to the board and assembling the independent management team to be based in Los Angeles.

Analysts have estimated that the JV’s pricing could fall anywhere between $35 to $50 per month. Fox CEO Lachlan Murdoch suggested it would be in the “higher ranges of what people are talking about.” An individual close to the venture told TheWrap that pricing would be lower than YouTube TV’s $72.99 per month base plan.

Rather than split revenue equally from the partnership, the companies are expected to earn a similar carriage fee rate as they do through other distribution channels where their networks are available. The trio’s members will each be responsible for selling their own advertising and will retain all of the advertising revenue from their content, the individual close to the venture said. 

In its initial response letter to Congress on April 29, Fox, Warner and Disney said they expect Venu to attract 1 million subscribers by the end of the calendar year and 5 million within five years of launching.

“Local ABC and FOX affiliates will also have the  opportunity to be carried on this new service, generating an additional revenue stream  for stations,” the trio said. “Our respective companies will remain separate and independent and will continue to negotiate separately and independently with each distributor, including this new platform, regarding the carriage terms for each respective network. Nothing in the JV changes how we each negotiate carriage of our programming with other distributors.” 

Each company will continue to bid independently and compete with each other and others for the sports rights, the letter added.

“Our companies are aware of our legal obligations and are committed to structuring the  new service in a manner that is pro-consumer and in accordance with all relevant laws and regulations. While the definitive agreements are not yet finalized, the parties do not currently anticipate an [Hartt-Scott-Rodino] filing will be required,” their letter concluded. “We look forward to sharing more information as it becomes available and appreciate  your letter, which mirrors the goal of our new service: to provide consumers with more  TV viewing choice.”  

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