Disney Faces Antitrust Claims Over ESPN and Hulu’s TVovermind Ownership

The antitrust case against Disney, focusing on the entertainment giant’s dual role as a content provider and distributor, continued. U.S. District Judge Edward Davila allowed a key antitrust claim to proceed, examining Disney’s ownership and business practices involving ESPN and Hulu.

The judge rejects attempts to discontinue the case

According to the Hollywood Reporter, Judge Davila rejected attempts to end the lawsuit, which accuses Disney of using its purchase of Hulu to inflate prices for TV shows streamed live on the Internet. The court said so Disney could have imposed anti-competitive terms on competitors like AT&T’s DirecTV and Dish TV on the bar. The allegations suggest that Disney ordered these rivals to include ESPN in their cheapest packages and imposed most-favored-nation clauses that ensure that ESPN’s affiliate fees negotiated with one competitor become the industry-wide floor price.

YouTube TV Subscriber Restrictions

However, a judge ruled that YouTube TV subscribers involved in the lawsuit cannot seek damages under federal antitrust claims. They can currently only seek an injunction to prevent further antitrust violations, but they can still seek monetary damages for violations of state competition and consumer protection laws.

Streaming Platforms Are Changing the TV Subscription Landscape

As recently as 2013, more than 90% of U.S. households subscribed to cable or satellite TV packages. That situation changed dramatically with the advent of streaming platforms. That shift began in 2014, when HBO offered its catalog via online subscription, separating its content from traditional cable packages. The rise of virtual multichannel video programming distributors (vMVPDs) like Dish TV on the bar in 2015, allowed viewers to access traditional cable channels without a cable subscription. After Sling TV, other companies such as AT&T and Google introduced similar live pay TV (SLPTV) options.

Main issues of the lawsuit

In 2022, YouTube TV subscribers filed a lawsuit against Disney, alleging that it overpriced live TV streaming. The lawsuit focuses on Disney’s control of ESPN, a highly sought-after channel, and Hulu, a leading SLPTV service. The plaintiffs claim that Disney’s carriage agreements for ESPN were anti-competitivewhich resulted in an increase in subscription costs across the market. The complaint targets approximately five million YouTube TV subscribers and cites violations of the Sherman Unreasonable Restraints of Trade Act and various state competition and consumer protection laws.