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topicnews · September 11, 2024

Ahead of antitrust hearing, Fubo tells judge it will investigate ’round-tripping’ by Disney, Fox and Warner Bros. Discovery

Ahead of antitrust hearing, Fubo tells judge it will investigate ’round-tripping’ by Disney, Fox and Warner Bros. Discovery

As part of Fubo’s antitrust lawsuit against Disney, Fox and Warner Bros. Discovery, the pay-TV provider told a federal judge that it wants to reveal sensitive details of the media giants’ years-long broadcast negotiations.

Attorneys for both sides signed a joint letter to U.S. District Judge Margaret Garnett outlining certain priorities as the judge will convene a pretrial conference in her New York courtroom on Thursday morning. The goal of the conference will be to set a timeline for the jury trial, which Fubo said could possibly begin in June 2025 and the defense no earlier than October 2025. The parties will also work out the scope of discovery, witness testimony and other trial details.

Last month, Garnett surprised the media industry by siding with Fubo and issuing a temporary restraining order barring the launch of Venu Sports. The joint streaming company had planned to launch at the start of football season, but there are growing doubts about whether it will ever be able to take off. The ruling was not only a rebuke to media companies already struggling with the costs of cable; many analysts say it also threatens the existence of the traditional pay-TV package. As costly as it was to fail to launch Venu Sports on schedule, the outcome of the trial and the precedent investigation could undermine the media companies’ long-standing position in pay-TV negotiations.

Notwithstanding the injunction, which the media companies have appealed, Fubo’s lawsuit takes aim at a larger target: the negotiating posture of programmers, which the company says forces it to offer less attractive channels. The result, Fubo says, is higher prices for consumers. A similar issue is at the heart of a current distribution dispute between DirecTV and Disney that has resulted in 16 Disney channels being off the air since Sept. 1. The Fubo/Venu case has been cited by DirecTV as an indication that Disney has ulterior motives for not being flexible in negotiations with distributors, a claim Disney has denied.

So far, Fubo’s lead attorney Mark Hansen writes in the letter, the two sides in the case, as well as third parties, have submitted more than 515,000 documents and taken 28 witness depositions. The purpose of the discovery so far has focused on the efforts behind the Venu joint venture. In the lead-up to the jury trial, Fubo said, the company plans to seek more evidence about the defendants’ bundling practices and negotiations, including “most-favored-nation” agreements with certain distributors. Most-favored-nation agreements generally require programmers to comply with similar terms with multiple distributors. The Venu joint venture, Garnett said in her ruling, is anticompetitive because it is the result of three sports powers pooling resources and exerting undue influence in the market.

Hansen argues in the brief that the purpose of disclosure at this stage will be to explore broader terrain. “Unlike the joint venture,” he wrote, “each of the defendants has separately operated its own licensing practices, and those practices have existed for decades, since Fubo came to market in 2015, meaning that disclosure for these claims must begin much earlier” than the disclosure related to the preliminary injunction required for the preliminary injunction.

Details of feed negotiations are kept top secret, even though they often involve publicly traded companies. Even the expiration date of a programming deal is usually not officially disclosed, and the financials or other terms of the agreements are also kept completely under wraps and not reported on earnings reports. If the Fubo case goes to court, it could result in a number of previously secret interactions becoming public and provide a clearer look at how the pay-TV ecosystem works at a sensitive moment.

As for the case’s timeline, Garnett has already indicated that she is eager for the trial to move quickly. Fubo warned the media companies against “obfuscation and delaying tactics,” but lead defense attorney Antony Ryan pointed to “the extensive and complex evidence that remains to be presented.” The defendants argued in the letter to the judge that a trial start date of February 2026 would still be relatively expeditious by antitrust standards, since Fubo is on trial two years after the original lawsuit was filed.