In a new lawsuit that could further shake up the sports streaming industry, FuboTV Tuesday sued Walt Disney Company, ESPN, Hulu, Fox and Warner Brothers Discovery for alleged antitrust violations that Fubo contends have caused it “billions of dollars in damages.”
The allegations are contained in a federal complaint filed in the Southern District of New York. As of this writing, the case has not been assigned to a judge, and the complaint remains sealed. However, Fubo issued a press release about its case, which demands a jury trial and was first reported by the The Wall Street Journal.
As Fubo tells it, the company has been a victim of a “years-long campaign” to stymie Fubo’s moderately priced sports-first streaming service. Fubo also warns the defendants’ planned fall launch of a streaming service “steals Fubo’s playbook.”
Among the alleged anticompetitive practices outlined by Fubo is what it terms “unfair bundling.” Fubo claims it is “forced” to carry expensive, non-sports channels as a contractual prerequisite to being able to obtain licenses for the defendants’ sports channels.
Fubo also accuses the defendants of charging higher content licensing rates than they charge other distributors, which in turn leads to Fubo passing on the expense to consumers in the form of higher prices. Fubo thus implies it would charge subscribers less in a more competitive market.
Fubo complains that the defendants have denied it a chance to offer desirable content through Hulu. Similarly, the defendants have (allegedly) prohibited Fubo from carrying sports channels that will be included in the streaming service set to debut this fall.
Federal antitrust law prohibits certain types of anticompetitive practices adopted by businesses at different levels in the same distribution—also known as vertically integrated businesses. Fubo depicts the defendants as vertically integrated media companies. Antitrust law acknowledges that vertical integration can bring about efficiencies that lower costs for consumers and encourage businesses to innovate. But vertical integration can also hinder opportunities for other businesses to compete in the same distribution and thus raise prices.
Expect Fubo and the defendants to offer drastically different accounts of the value or harm of vertical integration. The defendants are also likely to portray Fubo as willingly entering into business agreements that it might now regret, but regret is not evidence of unlawful acts. The defendants might also assert that neither Fubo nor any streaming service has a legal right to license defendants’ content or to obtain a license at a preferred price.
The parties could settle at any time, but if the litigation plays out, it could last a while. Antitrust cases, particularly those involving deep-pocketed businesses, tend to take years. They also tend to prove very expensive, with expert testimony and empirical analysis playing key roles.
When Disney, Fox and Warner Bros. Discovery announced their planned joint streaming venture for sports content earlier this month, Fubo shares dropped 22%.