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US to scrutinize Disney, Fox, Warner sports streaming deal, Bloomberg Law reports

Published 02/15/2024, 02:56 PM
Updated 02/16/2024, 04:10 AM
© Reuters. The logo of the Times Square Disney store is seen in Times Square, New York City, U.S. December 5, 2019.  REUTERS/Nick Pfosi/File Photo

(Reuters) - The U.S. Department of Justice aims to scrutinize a sports streaming platform planned by Walt Disney (NYSE:DIS), Fox and Warner Bros Discovery (NASDAQ:WBD) over concerns it could harm consumers, sports leagues and rivals, Bloomberg Law reported on Thursday.

The Justice Department will examine the terms of the deal when it is finalized, the report added, citing two people familiar with the matter.

Earlier this month, the three media companies said they will launch a joint venture to start a sports streaming service this autumn to capture younger viewers.

The trio have a broad portfolio of professional and collegiate sports rights, which span the National Football League, the National Basketball Association, Major League Baseball, FIFA World Cup and college competitions.

A new app would provide non-exclusive access to a collection of television sports networks, including ESPN, Fox Sports 1 and TNT, as well as to content that is streamed.

Fox, Warner Bros Discovery and Disney could not be immediately reached for comment, while the Justice department declined to comment.

"I think it obviously raises serious competition issues and antitrust issues when you have the largest players in the online distribution of sports getting together and jointly launching a new service," said Seth Bloom, antitrust lawyer with Bloom Strategic Counsel in Washington and former general counsel of the Senate Antitrust Subcommittee.

He added, "The DOJ would likely look at the competitive implications of that and whether other companies that wish to provide this service will be foreclosed from the market.”

Fubo, a sports-focused streaming service, called for scrutiny of the new joint venture shortly after it was announced. In a Feb. 7 statement, Fubo said the media partners command "significant market share," reportedly controlling 60% to 85% of all sports content.

“Every consumer in America should be concerned about the intent of this joint venture and its impact on fair competition,” it said.

Fubo declined to comment on Thursday.

Robin Feldman, professor at the University of California Law San Francisco, said the sports streaming service plan came around the time of a Super Bowl where fans may have struggled to figure out how to watch the big game.

"Consumers may see it as a benefit to be able to have one coordinated store," said Feldman. "Consumer benefit is something that is weighed in the balance of harm to consumers. For example, if the result of the combination is that consumers will have no other choices, then the one store in town ends up with the power to raise prices and impose demands on everyone who wants access. These are the types of issues that competition authorities have to consider."

© Reuters. The logo of the Times Square Disney store is seen in Times Square, New York City, U.S. December 5, 2019.  REUTERS/Nick Pfosi/File Photo

Disney also plans to launch a stand-alone streaming version of ESPN in autumn 2025, which would incorporate digital features such as sports betting, fantasy sports and e-commerce.

Disney CEO Bob Iger told investors during the company's quarterly results call that the digital ESPN offering would create "a one-stop sports destination unlike anything available in the marketplace today."

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