Announced earlier this month, the proposed streaming service aims to amalgamate content from various networks, including Disney’s ESPN and ABC, Fox, and Warner channels
The United States Justice Department is gearing up to closely examine the proposed joint streaming service by media giants Walt Disney, Fox Corp, and Warner Bros. Discovery Inc., citing concerns over potential harm to consumers, competitors, and sports leagues. Sources familiar with the processes revealed that regulators are poised to analyze the terms of the collaboration once finalized. While the companies involved have yet to receive official notification of the impending review, insiders caution that it may not necessarily result in immediate action, preferring anonymity due to the sensitive nature of the ongoing review.
Announced earlier this month, the proposed streaming service aims to amalgamate content from various networks, including Disney’s ESPN and ABC, Fox, and Warner channels such as TNT and TBS. Analysts estimate that the joint venture could command approximately 55% of US sports rights by cost, amounting to a substantial $14.4 billion of the total $26.7 billion spent in 2024.
Purportedly targeting viewers outside the traditional pay-television bundle, the collaboration intends to provide access to sports programming akin to that available through conventional cable packages. However, the announcement has already raised objections from smaller cable providers and select Internet TV services, voicing concerns over potential price hikes and reduced market options.
Steve Salop, an emeritus antitrust professor at Georgetown Law School, pointed out that the deal’s implications could restrict the avenues for sports leagues to negotiate their broadcasting rights. While the Justice Department declined to give comments on the matter, representatives from the involved companies didn’t shed light on the matter either.
The proposed streaming service promises to offer viewers a plethora of sports content, including Major League Baseball, the National Basketball Association, the National Hockey League, NASCAR, and college basketball, all consolidated into one platform. However, it is worth noting that rights to approximately half of the National Football League’s games remain with other entities, such as Comcast Corp.’s NBC, Paramount Global Inc.’s CBS, and Amazon Inc.
Regardless of the public interest in the matter, Assistant Attorney General for Antitrust Jonathan Kanter has evaded questions regarding the new sports streaming service in recent appearances. Nevertheless, the Justice Department’s keen interest in both sports and media developments potentially raising antitrust concerns is evident. Notably, the agency has launched investigations into the PGA Tour and joined an antitrust lawsuit against the National Collegiate Athletics Association over player transfer restrictions.
Reflecting on past antitrust actions, particularly Disney’s acquisition of assets from Fox in 2018 and AT&T Inc.’s merger with Time Warner, it remains to be seen how regulators will regulate the complexities of this latest venture. Despite the various setbacks, including a failed attempt to block AT&T’s merger, recent industry developments, and the Biden administration’s stance on joint ventures suggest a thorough review process lies ahead.
Experts anticipate a protracted review period for the proposed streaming service, with attention focused on potential market implications and competitive dynamics. While historical precedents offer some insight, the unique landscape of modern technology and media consumption complicates the evaluation process.
Hugh Johnson, Disney’s Chief Financial Officer, reiterated the company’s commitment to healthy competition for sports rights, emphasizing the non-exclusive nature of the proposed service. Additionally, Disney plans to introduce a streaming version of its ESPN brand within the next year, featuring interactive elements such as sports betting and fan engagement, at a price point below the new sports offering. Notably, Fox currently lacks a subscription-based streaming service for sports content, while Warner Bros. max requires a separate $9.99 add-on for live sports streaming.
As stakeholders brace for a comprehensive regulatory review, the fate of the joint streaming venture hangs in the balance, with its implications for consumers, competitors, and the broader media landscape under intense scrutiny.