DirecTV, Dish Say ‘Not So Fast’ On Letting Venu Launch
DirecTV and Dish have asked the judge who enjoined Disney, Fox and Warner Bros. Discovery from launching the Venu sports streaming service s to continue to examine the antitrust issues raised by the joint venture in a suit by Fubo
This week, Disney agreed to acquire 70% of Fubo, which in turn dropped its charges against Venu. As part of the deal Fubo received cash, will run Disney’s Hulu Plus Live vMVPD and launch a new service featuring the Disney linear channels that carry sports. The agreement appeared to clear the way for Venu to launch as soon as March.
But DirecTV and Dish are telling the court “not so fast.”
“These transactions do nothing to resolve the underlying antitrust violations the Court and DOJ have correctly identified. Rather, it is a form of evading judicial review of the anticompetitive actions of Venu and its shareholders at the collective expense of fans, public institutions, leagues, conferences, teams, and players,” DirecTV said.
DirecTV and Dish were among the companies that filed briefs supporting Fubo’s claims that Venu was anti-competitive because its owners let Venu offer only channels that carry sports–something other distributors are not allowed to do.
In a letter to Judge Margaret Garnett of the U.S. District Court in New York, DirecTV noted that “The Court concluded that the Venu joint venture—and the exclusive right to license unbundled sports networks that it would enjoy—would allow Defendants to “drive out competitors” like DirecTV from the live pay TV market, all to the detriment of consumers and competition.”
The satellite company added that the Justice Dept. also said the launch would lessen competition by giving Venu an unfair edge.
DirecTV continues to evaluate its options with respect to the joint venture, the parties’ settlement, Defendants’ tying practices, and other anti-competitive harms, and it joins EchoStar in requesting that the Court reject any effort by the Defendants to vacate any prior rulings or findings in this case,” DirecTV said in its letter.
Here is the letter to Judge Carnett from EchoStar, Dish’s parent:
Dear Judge Garnett:
We write regarding the recent settlement between the Plaintiff and Defendants and the resulting dismissal of the above-captioned matter by stipulation. The Defendants have been found preliminarily to have violated the antitrust laws by their plan to launch a joint venture competing with distributors like DISH, for whom the Defendants are also the essential suppliers.The Court also denied the Defendants’ motion to dismiss the Plaintiff’s other claims, including claims that the Defendants have “tied” their programming content in violation of the Sherman Act. The Court’s decisions stand despite the dismissal; they may not, and should not, be vacated or diminished in any manner.
Through the settlement and acquisition, the Defendants have purchased their way out of their antitrust violation. But the Court’s decisions have correctly found harm that sweeps past the Plaintiff to the consuming public, independent programmers, and distributors, including DISH. In the Court’s words: “Fubo is not alone in navigating these imposed bundling requirements. Mr. Schanman, Executive Vice President of Video Services for EchoStar, testified extensively to his experience negotiating carriage agreements with the JV Defendants.”
Dismissal of this proceeding is unavoidable under Federal Rule of Civil Procedure 41.3 But, consistent with the law of this Circuit, the Court should do nothing to disturb its factual and legal findings by “allow[ing] a party with a deep pocket to eliminate . . . precedent it dislikes simply by agreeing to a sufficiently lucrative settlement to obtain its adversary’s cooperation[.]” Where, as here, the broader public has an interest not only in the development of case law through judicial precedent but also in protecting competition, the JV Defendants should not be able to pay their way into erasing the Court’s carefully reasoned decision.
The joint venture that the Court preliminarily enjoined from beginning operations and that will apparently be launched following the settlement will have broad anticompetitive effects harming consumers and distributors, including EchoStar’s DISH and Sling TV businesses. Given Venu Sports’ unprecedented combination of sports rights, the Court’s preliminary injunction has served a vital function in protecting both consumers and distributors like EchoStar from potential anticompetitive harm. The preliminary injunction stopped the JV Defendants’ scheme to monopolize the pay-TV market and, once accomplished, charge inflated prices to millions of Americans. The injunction also helped to preserve competitive pay-TV options for consumers, including for customers of services other than those of Plaintiff Fubo, as the Court noted in crediting the testimony of EchoStar executive Gary Schanman.
The parties’ settlement appears designed to eliminate court jurisdiction over this multifarious harm by effectuating the preliminary injunction’s expiration, rather than addressing the underlying competition issues. Defendants were able to do this through a $220 million payment (plus a $145 million loan) to Plaintiff Fubo. Now, with the injunction undone by voluntary dismissal, DISH, Sling, and other distributors will suffer antitrust injury. Their services will be hampered by the massive incentive that the JV Defendants have to raise programming fees for distributors that compete against Venu, and they will be effectively foreclosed from competing. Thus, the JV Defendants will be starving EchoStar and other effects of the JV appear to be widely shared both by Fubo’s competitors in the private sector (such as DISH, DIRECTV, and others) distributors with one hand of the skinny sports bundle that they will be supplying to consumers with the other.
EchoStar is currently evaluating its options regarding the joint venture, its harm to competition, and the Defendant’s tying practices. EchoStar asks the Court to resist any effort by the Defendants to vacate any prior decision in this case.