Attorneys General support ESPN, WBD, Fox and Hulu Venu Sports Appeal

FuboTV's victory in New York's Southern District last month was a major setback for Walt Disney, ESPN, Fox, Warner Bros. Discovery and Hulu's plan to launch sports-focused streaming platform Venu Sports this fall.

But in law, just as in sports, rematches sometimes happen.

These media companies are now appellants in a case before the U.S. Court of Appeals for the Second Circuit. They are relying on the Second Circuit's finding that U.S. District Judge Margaret M. Garnett disregarded the application of federal antitrust law when she granted Fubo's request for a preliminary injunction blocking the release of Venu Sports.

Unless a successful appeal is filed or an out-of-court settlement is reached, Garnett's injunction will remain in effect at least until a trial, which is not expected to take place until 2025 or later. At this point, it is unclear what interest these competing companies would still have in offering Venu Sports. They operate in a rapidly evolving industry and their valuation of Venu Sports could change by next year.

The appellants recently filed a 77-page brief outlining why they believe the Second Circuit should vacate Garnett's order and vacate their preliminary injunction. On Friday, the appellants received support when the attorneys general of Florida, Alabama, Iowa, Kentucky, Mississippi and South Carolina – all Republicans – filed an amicus brief insisting that Garnett had made a mistake.

The amicus brief was signed by Florida Attorney General Henry C. Whitaker and filed by Florida Attorney General Ashley Moody, who initiated legal action against the ACC earlier this year related to the conference's contract dispute with Florida State. Moody searched for documents containing the ACC's contracts with ESPN. The lawsuit ended last month when the ACC gave a redacted copy to Moody's office.

Garnett's verdict is now up for debate.

Garnett, a former assistant U.S. attorney for the Southern District of New York whom President Joe Biden nominated to the bench last year, was persuaded by Fubo's portrayal of rival companies (the appellants) unlawfully conspiring to promote their live sports offerings To monopolize Venu Sports. Fubo warned that the release of Venu Sports, expected to cost $42.99 per month, could put the company out of business.

To that end, Fubo insisted that Venu Sports would reduce competition in the live sports content market and ultimately increase consumer prices. Garnett also argued that “American consumers” should “not simply take Venu Sports companies’ word for it and hope for the best.”

But the complainants argue in a brief filed by J. Wesley Earnhardt and other attorneys at Cravath, Swaine & Moore and Dechert and Weil, Gotshal & Manges that Garnett's ruling is “the opposite of what the antitrust laws seek to accomplish.” ” The complainants emphasize that live sports content on Venu Sports would not be exclusive and Venu Sports would lack CBS, NBC, CNN, Fox News and other sports and non-sports channels. In their opinion, both factors promote competition in the market. As the complainants say, Venu Sports is intended to provide a lower-cost alternative to attract “price-conscious sports fans who have opted out of, or were never part of, the traditional TV ecosystem.”

The appellants also allege that Garnett failed to adequately consider U.S. Supreme Court precedent, including rulings holding that the loss of customers to a lower-priced competing product is not an injury that can be remedied by antitrust law . If Fubo consumers choose to trade Fubo for Venu Sports because of the lower price, the complainants say Fubo's harm is not an antitrust violation. Rather, it reflects that a competitor is offering consumers a more attractive product.

In addition, the complainants allege that Garnett erred in concluding that it would be anticompetitive not to offer Fubo or similar companies structured as multichannel video programming distributors the same terms and conditions – a scarce live Sports package – would have been offered. There are several Supreme Court rulings indicating that a company is not required to do business with a competitor or offer them comparable terms.

To support these arguments, the AGs emphasize that because they enforce state and federal antitrust laws, they “have a strong interest in encouraging pro-competitive behavior” and protecting consumers from anti-competitive behavior. From the AGs' perspective, Venu Sports is a joint venture that would offer consumers a service they can't currently get: the ability to get “a wide range” of sports content without having to pay for unwanted bundled content .

The AGs also claim that Garnett “appears to have fallen for an all-too-common gambit” by (they argue) allowing Fubo to use the legal system “as a tool for protectionism.” The AGs add that courts should view lawsuits from competitors “with skepticism,” otherwise they risk discouraging companies from facing the realities of the market.

In upcoming court filings, Fubo's lawyers will attempt to rebut those arguments.

They could also enlist the support of elected officials.

Last month, U.S. Senators Elizabeth Warren (D-Mass.) and Bernie Sanders (D-Vt.), along with U.S. Representative Joaquin Castro (D-Texas), wrote a letter to the Justice Department's Antitrust Division denouncing Venu Sports confirmed would enjoy “monopoly power over televised sports”. In this sense, they argued that Venu Sports would “control more than 80% of nationally broadcast sports and more than half of all national sports content.”