Venu Sports’ regulatory concerns are overblown

Add Congress to the list of entities very concerned about the upcoming Venu Sports service.

Earlier this month, U.S. Representatives Jerry Nadler and Joaquin Castro sent a second letter to the CEOs of Disney, Fox and Warner Bros. Discovery, asking for more details about the sports broadcasting platform that is a joint venture between the two companies and citing “inadequate” responses from executives so far.

With the Department of Justice reportedly investigating Venu and lawsuits pending against its partner companies, you might think the service is at risk of serious antitrust violations. Congressmen certainly think so.

“We are concerned that this joint venture – which brings together the owners of 80 percent of all sports media content – may reduce competition and disadvantage consumers,” Nadler and Castro wrote in their letter.

That’s a reasonable assumption, admittedly, after hearing that three media giants are teaming up on a product, especially in the high-profile streaming business. However, even a slightly closer inspection reveals that some of the key regulatory concerns about Venu are overblown — or at least misdirected.

“Leave consumers worse off”? First of all, what consumer is going to complain about only needing one service to stream all of these sports instead of three or more? Certainly, the entry of another subscription platform into the crowded streaming space seems to be a cause for concern, but Venu should give consumers the opportunity to consolidate and reduce their subscriptions, rather than simply adding more to the stack.

What’s more, Venu is the “skinny bundle” product consumers have long yearned for, free from the unwanted channels that have been part and parcel of a pay TV package for decades. Sports fans now have the ability to receive most of the live sports content available on linear networks without paying the high price of a pay TV subscription – in perhaps the most pro-consumer move by these companies in years.

It also helps explain hostility from Fubo, the plaintiff in the lawsuit against Venu’s co-owners. Virtual pay TV provider Fubo (also known as virtual MVPD) claims that the media giants “engaged in a multi-year campaign to block Fubo’s innovative, primarily sports streaming business, which resulted in significant harm to both Fubo and consumers “.

Translation: Fubo, probably like every other pay TV distributor, would love to be able to offer a product like Venu, and now it’s furious that sports rights holders are selling it themselves.

I cannot comment on the legality or veracity of the tactics Fubo claims have been used against it – such as allegedly charging licensing rates for Fubo content at least 50% higher than those charged by other distributors. However, when it comes to Venu, Fubo’s argument that the service will hurt pay-TV operators seems much stronger than its argument that it will hurt consumers.

Virtual MVPDs are already struggling to attract subscribers, and most cable companies are typically pulling out of the pay TV ecosystem altogether, rather than switching from a legacy provider to a virtual provider. With the launch of Venu, providers like Fubo will be under even greater pressure given the importance of live sports in their offerings.

Unfortunately for Fubo, this seems unlikely to convince antitrust regulators that the service is harmful to the market. As sports attorney Chris Deubert told Front Office Sports when the lawsuit was first filed in February: “Antitrust law protects competition. “It doesn’t protect competitors.”

Certainly, the media giants’ anti-skinny package policy looks much more malicious when the companies themselves offer such a product, and perhaps a judge or jury could be persuaded that the policy constitutes anti-competitive behavior in this context.

However, again this has much more to do with the potential impact on pay TV providers than with potential harm to consumers. It’s true that if Venu attracts enough subscribers, overpricing could become a problem, but there is a price cap on the service; raising monthly costs over a pay TV plan would defeat its purpose.

There are certainly legitimate concerns raised in lawmakers’ letter, namely about how Venu will be handled and whether partner companies will engage in collusion. Any partnership between such large players in such an oligopolistic space should indeed be subject to legal control.

But honestly, Venu shouldn’t be at the top of anyone’s antitrust priorities, especially not a Justice Department still struggling to make its case against Big Tech. To put it in football terms, it turns into a pile of dogs before the game even starts.