In a ruling poised to delay the release of Venu Sports to 2025 or beyond, U.S. District Judge Margaret M. Garnett on Friday granted FuboTV’s motion for a preliminary injunction to bar Walt Disney, ESPN, Fox, Warner Brothers Discovery and Hulu from moving forward with their sports-centric streaming platform.
The defendants will appeal Garnett’s ruling to the U.S. Court of Appeals for the Second Circuit, the Venu consortium confirmed in an email. The ruling also doesn’t end the case at the trial court level. Fubo sued in April and the litigation in the Southern District of New York could remain in court for many months, if not years. Fubo’s stock jumped 20% on the news and closed Friday up nearly 17% at $1.53 per share.
Venu Sports was expected to be released by this fall and cost $42.99 per month. It would be a “skinny” bundle of ESPN, Fox Sports, the SEC Network and other premium sports channels plus some mainstream channels like ABC, Fox and TNT that carry sports. While Venu Sports would offer a wide selection, it wouldn’t carry NFL games that air on CBS, NBC, Amazon Prime or Netflix and wouldn’t offer games carried by regional sports networks.
The ruling came as good news to others in the industry, including DirecTV, which supported Fubo’s motion in court. “We are pleased with the court decision and believe that it appropriately recognizes the potential harms of allowing major programmers to license their content to an affiliated distributor on more favorable terms than they license their content to third parties,” DirecTV spokesman Jon Greer said in an email.
Venu stakeholders said their product offers consumers more choice and that they would prevail in court. “We respectfully disagree with the court’s ruling and are appealing it. We believe that Fubo’s arguments are wrong on the facts and the law, and that Fubo has failed to prove it is legally entitled to a preliminary injunction,” and ESPN representative said in an email. “Venu Sports is a pro-competitive option that aims to enhance consumer choice by reaching a segment of viewers who currently are not served by existing subscription options.”
By granting Fubo’s motion, Garnett has dispatched Venu Sports to the penalty box for the foreseeable future. Absent a successful appeal, early resolution to the case or an out-of-court settlement, the injunction will remain in place at least until a trial, which likely won’t occur until 2025 or later. It’s possible the companies behind Venu Sports might view the wait as incompatible with their business goals and nix the platform altogether.
Fubo overcame difficult odds in convincing Garnett to enjoin Venu Sports. Preliminary injunctions are extraordinary and drastic remedies in law and require a showing of, among other things, a substantial likelihood of success on the merits and that it would suffer irreparable harm without an injunction. Hearings for preliminary injunctions also occur early in a litigation, before the opposing sides have been compelled to fully share relevant evidence and testimony.
Fubo built its argument around a depiction of Venu Sports as a trojan horse. Under the guise of offering sports fans something new and ostensibly dynamic, a group of rivals (i.e., Disney, Fox and Warner Brothers) have—the depiction goes—conspired to monopolize their live sports content. They’ve done so to increase each’s profits and to box out potential competitors.
The release of Venu Sports, Fubo further warned Garnett, could put the company out of business and lead to sports fans having fewer choices and paying more for content. Fubo also complained the defendants refuse to empower streamers to offer their own skinny sports bundles. They instead make streamers bundle sports channels with entertainment channels and other bloat that sports fans don’t want.
In her ruling, Garnett wrote that a decision from 1981 (U.S. v. Columbia Pictures), where movie producers tried to form a cable channel that would have exclusive access to new movies, “presents a scenario strikingly similar to this case.” In Columbia Pictures, a court blocked the movie producers’ plan on grounds their channel would diminish consumer options and make it more difficult for HBO, Showtime and other cable channels to compete. Garnett thought Columbia Pictures was on point since it occurred “at an analogous time of rapid change in the television and film industry” and involved a joint venture among competing businesses to limit how they competed.
One distinction between the two cases that didn’t sway Garnett was Columbia Pictures involved movies that would have been exclusive to the new channel whereas Venu Sports would not offer exclusive content. Garnett also didn’t seem to trust the defendants, at one point writing, “even if [they] swear that such price-hiking and competition-excluding will not actually occur … one purpose of antitrust injunctions is to prevent anticompetitive incentives from forming in the first place so that American consumers do not have to simply take their word for it and hope for the best.”
The defendants tried to persuade Garnett by identifying what they said were flaws in Fubo’s theory. They underscored that content shown on Venu Sports would not be exclusive to the streaming service and that each of Venu Sports’ backers would continue to individually license sports content—and thus continue to compete against each other. Sports fans, for example, can acquire ESPN through several means and next year ESPN will launch its own streaming service, Flagship, as well.
Venu Sports also wouldn’t include sports content from other competitors, such as Peacock, NBCU, CBS, Paramount+, Apple TV+ or RSNs. As the defendants pitched it, Venu Sports would be additive and pro-competitive in that it offers fans a choice they don’t currently have and doesn’t take away existing choices.
As to Fubo’s complaint that it’s been denied the chance to offer a skinny sports bundle, the defendants insisted that was legally irrelevant. They cited U.S. Supreme Court precedent standing for the proposition that there is no duty under antitrust law compelling businesses to negotiate with competitors or to offer them a particular price or service.
In an appeal, the Second Circuit would review Garnett’s decision to grant Fubo a preliminary injunction under the abuse of discretion standard. The judge’s ruling would be sustained so long as it falls within a range of permissible decisions. The defendants would argue Garnett committed an error of law, such as she applied the wrong standard or incorrectly applied the right standard, or fumbled the findings of fact.
–With assistance from Kurt Badenhausen.
(This story has been updated with additional quotes and details throughout.)
