Disney, WBD and Fox Brace for More Congressional Scrutiny After Friday Talks Fail to ‘Satisfy Concerns’ Over Venu Sports Bundle | Exclusive

Congressmen Jerry Nadler and Joaquin Castro are sending a follow-up letter with additional questions as early as this week, TheWrap has learned

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

Venu Sports will face additional questions from Congressmen Jerry Nadler and Joaquin Castro after the lawmakers’ staff met with representatives from Disney, Fox and Warner Bros. Discovery on Friday, TheWrap has learned.

An individual familiar with the matter told TheWrap that a follow-up letter will be sent to the three media giants as early as this week after the meeting did not satisfy concerns around how the offering will impact access, competition and choice in the sports streaming market.

Representatives for Disney and Warner Bros. Discovery did not immediately return TheWrap’s request for comment. Representatives for Venu Sports, Fox, Nadler and Castro declined to comment.

The update comes after Nadler and Castro penned a letter to Bob Iger, David Zaslav and Lachlan Murdoch on April 16, asking the trio to answer 19 questions they had about the offering by April 30.

“As programmers, your companies exert tremendous influence over pricing across the live sports TV ecosystem,” the letter states. “As a result, the Joint Venture raises questions about how this new offering would affect access, competition and choice in the sports streaming market. Without more complete information about the pricing, intent and organization of this new venture, we are concerned that this consolidation will result in higher prices for consumers and less fair licensing terms for upstream sports leagues and downstream video distributors.”

The joint venture was asked to include the Department of Justice in their responses. In February, Bloomberg reported that the DOJ was planning to launch an antitrust review of the offering.

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, NBA, WNBA, MLB, NHL, NASCAR, College Sports, UFC, PGA TOUR Golf, Grand Slam Tennis, the FIFA World Cup, cycling and much more. 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. Venu is aiming for 5 million subscribers within the first five years of its launch, Murdoch added.

When it comes to revenue 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. 

When previously asked about possible regulatory scrutiny, Murdoch said he’s “not overly concerned,” noting the offering is targeting 50 million to 60 million “cord never” households that aren’t currently being served. Likewise, Iger told CNBC in April that the media giants were proceeding “as though this is going to clear” government scrutiny.

In addition to scrutiny from lawmakers, Fubo has filed an antitrust lawsuit seeking to block Venu, alleging its the latest move in a years-long campaign of anticompetitive practices by Fox, WBD and Disney to block its business. A preliminary injunction hearing for the case has been set for Aug. 7.

Fubo, Dish Network, DirecTV, Newsmax, American Economic Liberties Project, Sports Fan Coalition, Open Markets Institute and the Electronic Frontier Foundation have also cosigned a letter urging Congress to hold hearings on the future of competition in the pay-TV market, arguing that Venu raises “serious competition concerns” that call for lawmakers’ “immediate oversight.”

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