The Disney/ESPN, Fox Corp. and Warner Bros. Discovery sports-streaming joint venture has drawn congressional scrutiny.
In a letter despatched Wednesday (April 16) to the CEOs of the three firms, Rep. Jerrold Nadler (D.-NY), the rating member of the House Judiciary Committee, and Rep. Joaquin Castro (D.-Texas) requested solutions concerning the aggressive implications of the proposed sports activities streaming JV.
“As programmers, your companies exert tremendous influence over pricing across the live sports TV ecosystem,” Nadler and Castro wrote within the letter to Disney’s Bob Iger, Fox’s Lachlan Murdoch and Warner Bros. Discovery’s David Zaslav.
The three firms’ three way partnership, the letter continued, “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 reps requested solutions by April 30. Among their checklist of 19 questions: “Will the Joint Venture Partners implement provisions to prevent anticompetitive sharing of pricing or other competitively sensitive information among each other?”
Reps for Disney, Fox and WBD didn’t instantly reply to requests for remark.
Disney, Fox and WBD unveiled their partnership in February and stated they expected to debut their sports-streaming bundle in the fall of 2024. The three way partnership will pool ESPN+ and the businesses’ linear TV networks that carry sports activities programming; pricing hasn’t been introduced. Some have dubbed the JV “Spulu,” a portmanteau of “sports” and “Hulu” (which initially was a three way partnership amongst broadcasters). Notably, the JV excludes NBCUniversal and Paramount Global/CBS.
The Justice Department reportedly has been planning to overview the Disney-Fox-WBD enterprise over doable shopper harms, per Bloomberg. In addition, web pay-TV supplier Fubo filed a federal lawsuit seeking to block the JV service’s launch, alleging the enterprise violates antitrust legal guidelines.
Earlier this month Disney CEO Bob Iger stated the JV is continuing on the assumption that it’ll clear regulatory scrutiny. “We think it’s actually a sports fans delight in terms of being able to watch all those sports in one place. Very pro-consumer,” Iger stated in an appearance on CNBC.
Disney, Fox and WBD have introduced former Apple TV+ exec Peter Distad as the JV’s CEO. Earlier, Fox Corp. CEO Lachlan Murdoch stated the corporate expects the sports activities streaming enterprise to reach 5 million subscribers after five years, making the purpose that Fox Corp. expects the sports activities streaming enterprise to be incremental to its present pay-TV income base.
These are the questions Nadler and Castro requested solutions to from the CEOs, which requested that additionally they copy their responses to the Justice Department:
- What are the related markets impacted by the Joint Venture?
- How many subscribers is the Joint Venture projected to have inside 1, 3, and 5 years of launch?
- Will the Joint Venture distribute channels of non-joint enterprise companions?
- How will the Joint Venture Partners decide the pricing of their very own sports activities channels (e.g., Fox Sports, ESPN) included within the Joint Venture?
- How do these costs evaluate to costs at which such channels are at the moment licensed to third-party MVPDs or digital MVPDs?
- Will the Joint Venture Partners implement provisions to forestall anti-competitive sharing of pricing or different competitively delicate info amongst one another?
- What measures will the Joint Venture Partners implement to forestall interlocking directorates?
- When will the pricing of the Joint Venture be decided and introduced?
- What League Properties does every Joint Venture Partner at the moment maintain the rights to, the place “League Property” means a content material licensing settlement with any of the next: the NFL, the NBA, the MLB, the NHL, the NCAA Basketball Tournament, NCAA Football (by main league) and NCAA Basketball (Men’s and Women’s). What League Properties to licensors aside from the Joint Venture Partners maintain the rights to?
- For every of the sports activities channels that might be included within the new service, what number of hours of reside occasions for League Properties does the channel transmit per calendar 12 months?
- To what extent will clients be supplied alternatives to bundle different merchandise supplied by the Joint Venture companions with the Joint Venture? Will Joint Venture clients be supplied the chance to bundle the Joint Venture with direct-to-consumer merchandise of third events?
- Will the Joint Venture Partners provide stand-alone streaming sports activities companies? If the Joint Venture Partners determine to supply unbiased choices from the Joint Venture, how will firewalls be carried out to make sure there isn’t a collusion between the Joint Venture and their unbiased streaming sports activities presents?
- The Joint Venture Partners at the moment bid towards one another for sports activities content material. However, the brand new enterprise might be pooling sports activities content material among the many Joint Venture Partners. Will the Joint Venture Partners proceed to bid competitively towards each other for sports activities rights as they turn out to be obtainable?
- Will the Joint Venture Partners make the channels they embrace within the Joint Venture obtainable to 3rd events on non-discriminatory phrases?
- Will the Joint Venture companions negotiate collectively with MVPDs to license sports activities channels? Also, with digital MVPDs?
- Will the Joint Venture Partners proceed to require that MVPDs and digital MVPDs buy different programming along with their sports activities channels as a situation of their licensing agreements? Will the Joint Venture Partners proceed to require penetration minimums for his or her sports activities and different channels when negotiating with MVPDs and different digital MVPDs?
- The firms suggest to have interaction in a type of vertical integration, leveraging their content material property right into a digital MVPD. In earlier transactions involving vertical integration between programmers and MVPDs (e.g., Comcast-NCBU, AT&T-Time Warner), the events made sure commitments to submit licensing negotiations to binding arbitration. Will three way partnership companions make related commitments?
- Prior to negotiation of the Joint Venture, what standalone plans had every of the Joint Venture Partners thought-about for making their sports activities channels obtainable through streaming, together with however not restricted the launch of a brand new digital MVPD or inclusion within the Joint Venture Partner’s present streaming service (e.g., Disney+ or MAX).
- Do you anticipate the three way partnership might be required to make a submitting with the Department of Justice and Federal Trade Commission beneath the Hart-Scott-Rodino Act?
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