Venu Sports suspended: What does this mean for TV packages?

However, Venu Sports is unlikely to launch this fall.

The $43-a-month service is meant to bundle sports and entertainment channels from Disney, Fox and Warner Bros. Discovery, while excluding news and entertainment channels that make other pay-TV packages more expensive. Venu had planned to launch in time for college football season, but U.S. District Judge Margaret Garnett issued an injunction against the service last Friday, ruling that Fubo would likely win its antitrust lawsuit against the company. Venu’s supporters will appeal, but they can’t launch the service in the meantime, and the lawsuit could stall it for years.

In the short term, the decision hurt. While Venu Sports wasn’t meant to be for everyone, it would be the cheapest way to stream some broadcast and sports channels like ESPN, ABC, and FS1. It would also fit in nicely with one of our top over-the-air antenna picks for other broadcast channels like CBS and NBC.

But cable-cutters benefit from competition, and Venu’s supporters have blessed the service with a slick channel package that no other live streaming provider could offer. While developers should definitely embrace smaller, more flexible channel packages, they should grant that flexibility to any TV service that wants it.

Trimming fat

Venu is differentiating itself not with the sports channels it wants to offer, but with the non-sports channels it doesn’t. While Disney, Fox and Warner have a wide range of news and entertainment channels, they don’t offer those channels on Venu to keep the price low. It’s a significant departure from the status quo, where programmers bundle all their channels to increase the streaming fees they charge each pay-TV subscriber.

While programmers typically don’t disclose their streaming fees, we can use unofficial data to estimate how much more expensive Venu would be if it included its sponsors’ non-sports channels. In 2020, Variety reported monthly streaming fees of $1.72 per subscriber for Fox News, $1.10 for Disney Channel, $1.01 for CNN and $0.81 for FX. As of 2021, Discovery also charged streaming fees of up to $3.50 for channels like HGTV, History and Discovery Channels.

That works out to about $8 per month, but those are outdated numbers and don’t include less popular channels like Freeform and Disney’s Fox Business. Programmers have routinely sought more money for their channels over time — Fox reportedly asked for $3 per Fox News subscriber last year — so we can assume the actual amount is a bit higher.

In short, let’s say Venu Sports is able to save about $10 per month on its starting price by excluding news and entertainment channels.

That’s a lot of money for an increasingly worthless slop of content. The best original programming has migrated from basic cable to streaming services, and there are plenty of ways to watch news without the major cable networks. Sports are becoming the last thing on cable worth paying for, and Venu Sports’ backers saw an opportunity to build a new business around it.

Excluding alternatives

If you could cut your monthly pay-TV bill by $10 by cutting out channels like HGTV, FX, and CNN, would you do it? Many people probably would, which may explain why Venu advocates didn’t want the option to be widely adopted.

As Judge Garnett noted in her ruling (helpfully commented on here by Lightshed Partners), Fubo wanted to offer a similar package, minus the non-sports options, at a lower price. But in failed negotiations with Warner Bros. Discovery, Fubo asked for the same set of channels and was rejected. As the ruling notes, Disney, Fox, and Warner agreed not to distribute Venu through other TV providers.

Venu’s backers also agreed not to form any other sports-related joint ventures for at least three years. That would prevent, say, NBCUniversal and Paramount from teaming up with Disney on a separate service combining ESPN with live sports coverage from NBC and CBS.

In other words, Venu’s supporters had made a deal that would prevent any other skinny sports package from ever existing, at least as far as their channels were concerned. Fubo saw this as an existential crisis, believing Venu would immediately start sucking out its subscribers.

Judge Garnett agreed, but he also saw broader potential for consumer harm: Not only could options like Fubo disappear, but Venu’s backers would have more power to raise streaming rates on every other TV provider, knowing they could steal more customers as the price of thicker packages rose. In the absence of meaningful competition, Venu would have “unchecked ability to raise prices beyond the limits of consumer tolerance,” Garnett wrote.

Let a dozen Venu(e)s bloom

From the perspective of someone abandoning cable, the solution seems obvious: Venu supporters should simply allow other TV providers to offer the same, slimmed-down packages.

These providers could then approach other programmers like Paramount and NBC, urging them to offer similar sports-focused programming, while also offering regional sports add-ons. By cutting the fat from non-sports channels, live TV services like YouTube TV and Fubo would finally transform into what cable-cutting sports fans have always wanted: exclusive hubs for the most popular sports events on TV at fair prices.

With Venu Sports, Disney, Fox and Warner wanted to have their cake and eat it too. They hoped to secure all the benefits of launching their own skinny sports packages, but without the risk of the easy streaming fees that come with endless movie marathon channels and 24-hour chatterboxes in other TV packages.

They surely realize that those revenues are evaporating anyway. But now they have nothing to show for it—and unfortunately, neither do we.

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