Venu Sports on hold: What it means for TV bundling

Venu Sports is unlikely to launch this fall after all.

The $43-per-month service is supposed to bring together broadcast and sports channels from Disney, Fox, and Warner Bros. Discovery, while excluding the news and entertainment channels that make other pay TV packages more expensive. Venu was planning to launch in time for football season, but last Friday, U.S. District Judge Margaret Garnett granted an injunction against the service, ruling that Fubo was likely to win its lawsuit against the venture on antitrust grounds. Venu’s backers will appeal, but they can’t launch the service in the meantime, and a trial could stall the service for years.

In the near term, the decision stings. While Venu Sports was not going to be for everyone, it would have been the cheapest path to streaming certain broadcast and sports channels, such as ESPN, ABC, and FS1. It would have also paired well with one of our top picks of over-the-air antenna for other broadcast channels, such as CBS and NBC.

But cord-cutters benefit from competition, and Venu’s backers were blessing the service with a slim channel package that no other live TV streaming provider could offer. While programmers should absolutely embrace smaller, more flexible channel bundles, they should grant that flexibility to any TV service that wants it.

Trimming the fat

Venu is notable not for the sports channels it wants to offer, but for the non-sports channels it doesn’t. While Disney, Fox, and Warner own a broad array of news and entertainment channels, they left those channels out of Venu to keep the price down. This is a significant break from the status quo, in which programmers bundle all of their channels together to increase the carriage fees they collect from every pay TV subscriber.

While programmers typically don’t disclose carriage fees, we can use unofficial figures to estimate how much pricier Venu would be if it included its backers’ non-sports channels. In 2020, Variety reported monthly carriage 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 was also collecting as much as $3.50 in carriage fees for channels such as HGTV, History, and Discovery Channels.

That adds up to about $8 per month, but those are outdated figures and don’t include less popular channels such as Disney’s Freeform and Fox Business. Programmers routinely seek more money for their channels over time—Fox was reportedly asking for $3 per subscriber for Fox News last year—so we can assume the actual number’s a bit higher.

As a rough ballpark, let’s just say Venu Sports is able to shave about $10 per month off its asking price by excluding news and entertainment channels.

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

Shutting out alternatives

If you could lop $10 off your monthly pay TV bill by forgoing the likes of HGTV, FX, and CNN, would you? A lot of folks presumably would, which might explain why Venu’s backers did not want that option to be widespread.

As Judge Garnett noted in her ruling (helpfully annotated here by Lightshed Partners), Fubo wanted to offer a similar bundle, free of non-sports options at a lower price. But in its failed carriage negotiations with Warner Bros. Discovery, Fubo asked for the same lineup of channels and was rebuffed. 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 preclude, say, NBCUniversal and Paramount from aligning with Disney on a separate service that combined ESPN with live sports from NBC and CBS.

In other words, Venu’s backers made an agreement that would prevent any other sports skinny bundle from existing, at least if it involved their channels. Fubo saw this as an existential crisis, believing Venu would immediately begin siphoning away its subscribers.

Judge Garnett agreed, but also recognized the broader potential for consumer harm: Not only might options like Fubo cease to exist, but Venu’s backers would have more power to raise carriage fees on every other TV provider, knowing they could scoop up more customers as the price of fatter bundles went up. Absent meaningful competition, Venu would then enjoy “an unchecked ability to raise prices to the limit of consumer tolerance,” Garnett wrote.

Let a dozen Venu(e)s flourish

From a cord-cutter’s standpoint, the solution seems obvious: Venu’s backers just should let other TV providers offer the same, slimmed-down packages.

Those providers could then approach other programmers, such as Paramount and NBC, pushing them to offer similar sports-centric lineups, while also providing add-ons for regional sports. By trimming the fat of non-sports channels, live TV services such as YouTube TV and Fubo would finally transform into what cord-cutting sports fans have always wanted: Singular hubs for the most popular sporting events on television at fair prices.

With Venu Sports, Disney, Fox, and Warner wanted to have their cake and eat it too. They hoped to lock in all the benefits of launching their own skinny sports bundles, but without risking the easy carriage fees that come from the endless movie marathon channels and 24-hour talking heads on other TV packages.

Surely they realize that those revenues are evaporating either way. Only now they have nothing to show for it—and, unfortunately, neither do we.

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