The sports streaming collaboration between Disney’s ESPN, FOX, and Warner Bros. Discovery faces a potential regulatory roadblock.
According to Bloomberg, the US Justice Department will analyze the agreement to determine whether the service will hurt consumers, competitors, or sports leagues that cooperate with the corporations. The review will begin once the collaboration is formalized, Bloomberg reported, citing unnamed sources, and the companies have not yet been alerted.
The three media titans stunned the world by announcing the collaboration earlier this month. The three plan to combine 14 sports-related channels, including ESPN, FS1, and local FOX and ABC affiliates, into a streaming version of a thin cable TV bundle. The agreement would give sports fans with an abundance of content from all of the major leagues.
However, competitors responded immediately. Fubo had worries about the deal, and CEO David Gandler requested a review. According to reports, NFL Commissioner Roger Goodell was taken aback by the news and has instructed his lawyers to review the terms of their contracts. Grant Spellmeyer, CEO of ACA Connects, which represents smaller cable companies, slammed the agreement.
“You don’t need a crystal ball to see this proposed juggernaut will abuse market power to siphon off fans and stick them later with higher bills to access sports,” he went on to say.
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ESPN, FOX, Warners, and the Justice Department did not immediately respond to requests for comment.
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The announcement was for the three firms to start working together, though FOX CEO Lachlan Murdoch stated that he has seen some early models of what the service will look like. There are some issues about the service, including the price, but it is apparent that the JV would have the majority of sports rights in the United States.
That is alarming for practically everyone who is not engaged in this transaction, from cable companies who stand to lose consumers to this streaming service, to sports leagues who were not consulted on the pact, and rival media businesses who stand to be boxed out. Disney CEO Bob Iger and Murdoch claim they’re targeting a new audience of “cord nevers” who don’t already subscribe to cable, but most experts believe cord cutting will accelerate.
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