Representatives Jerry Nadler (D-N.Y.) and Joaquin Castro (D-Texas) want answers by the end of the month and are calling for the Justice Department to get involved.
“This joint venture raises questions about how this new service will impact access, competition, and choice in the sports streaming market,” said Nadler, ranking member of the House Judiciary Committee, and Media Exclusive. wrote Castro, who has long defended the Prohibition issue. , today to three CEOs. Without more complete information about the price, intent, and organization of this new business, we believe that this combination will result in higher prices for consumers and unfair licensing terms for upstream sports leagues and downstream video distribution companies. I'm concerned. ”
Requiring the Department of Justice to CC all responses submitted by Disney, Fox, and WBD by April 30th would undoubtedly increase the risk.
As seen below, Democrats submitted a list of 19 questions regarding the potential anti-competitive nature of “joint ventures.” Specifically, Mr. Nadler and Mr. Castro will explain how it works, how much it costs, how it bids for contracts, how sports channels are licensed, and what “to prevent the anticompetitive sharing of pricing and other competitively sensitive information.” I would like to know if they intend to do so.
Mr. Robert Iger
Chief Executive Officer, Walt Disney Company
Mr Lachlan Murdoch
FOX Executive Chairman and CEO
Mr. David Zaslav
CEO, Warner Bros. Discovery
Dear Mr. Iger, Mr. Murdoch and Mr. Zaslav.
We have written to you seeking information regarding the proposed sports streaming joint venture (the “Joint Venture”) that you announced in February.
While streaming has changed the way Americans access most media content over the past decade, the live sports distribution space has remained relatively static. Still, live sporting events such as the Super Bowl and the NCAA's March Madness tournament accounted for 97 of the top 100 most-watched television broadcasts in 2023. In his recent appearance on CNBC, Hugh Johnson, his CFO of Walt's Disney and his company, said that your company's overall performance. He controls 80% of this content market.
As a programmer, your company has tremendous influence over pricing across the live sports TV ecosystem. Upstream, programmers negotiate content licensing agreements with sports leagues such as the National Football League and the National Basketball Association to obtain media rights to sporting events. Downstream, the programmer determines the terms under which video distributors will license the programmer's sports channel. Historically, distributors have primarily been multichannel video program distributors (“MVPDs”), such as cable and satellite television companies Comcast, DISH, and DirecTV. In the streaming era, distributors have expanded to include virtual multichannel video programming distributors (“virtual MVPDs” or “vMVPDs”) that offer their services over the Internet, such as YouTubeTV, fuboTV, and Sling.
As a result, the joint venture raises questions about how this new service will impact access, competition, and choice in the sports streaming market. Without more complete information about the price, intent, and organization of this new venture, could this combination result in higher prices for consumers and unfair licensing terms for upstream sports leagues and downstream video distribution companies? I am concerned that this may not be the case.
In order to better understand our joint venture, we respectfully request that you respond to the following questions by April 30, 2024. Please copy the contents of the Ministry of Justice in the answer.
1. What are the relevant markets affected by the joint venture?
2. How many subscribers does the joint venture expect to gain within one, three, and five years of launch?
3. Does the joint venture distribute channels for non-joint venture partners?
4. How will the joint venture partners price their own sports channels (Fox Sports, ESPN, etc.) to be included in the joint venture?
5. How do these prices compare to the prices at which such channels are currently licensed to third-party MVPDs or virtual MVPDs?
6. Will joint venture partners implement provisions to prevent anti-competitive sharing of pricing and other competitively sensitive information with each other?
7. What steps will the joint venture partner take to prevent board interlocking?
8. When will the joint venture price be determined and announced?
9. League Properties to which each joint venture partner currently holds rights. “League Properties” means any content licensing agreement with the NFL, NBA, MLB, NHL, NCAA Basketball Tournament, or NCAA. Football (Major League) and NCAA Basketball (Men's and Women's). What assets of the league do licensors other than joint venture partners have rights to?
10. For each sports channel included in the new service, how many hours of live events on league properties will that channel broadcast per calendar year?
11. To what extent will customers have the opportunity to bundle other products offered by the joint venture partner with the joint venture? Customers of the joint venture will have the opportunity to bundle the joint venture with third-party direct-to-consumer products Is it provided?
12. Will the joint venture partner offer a standalone streaming sports service? If the joint venture partner decides to offer a service independent of the joint venture, will there be collusion between the joint venture and its independent streaming sports service? How are firewalls implemented to ensure that
13. The joint venture partners are currently bidding against each other for sports content. However, the new venture will pool sports content between the joint venture partners. Will joint venture partners continue to compete with each other to bid for sports rights as they become available?
14. Will the joint venture partner make the channels included in the joint venture available to third parties on nondiscriminatory terms?
15. Will the joint venture partner jointly negotiate with the MVPD to license sports channels? And what if a virtual MVPD is used?
16. Will the joint venture partner continue to require MVPDs and virtual MVPDs to purchase other programming in addition to sports channels as a condition of the license agreement? Will the joint venture partner continue to require MVPDs and virtual MVPDs to purchase other programming in addition to sports channels? Do you still require minimum penetration for sports and other channels?
17. Both companies propose to engage in a form of vertical integration, leveraging their content assets into a virtual MVPD. In previous deals involving vertical integration between a programmer and his MVPD (e.g. Comcast-NCBU, AT&T-Time Warner), the parties made certain commitments to submit licensing negotiations to a legally binding .
arbitration. Will the joint venture partners make similar commitments?
18. Prior to the joint venture negotiations, what independent plans did each joint venture partner have for making their sports channels available via streaming? This includes, but is not limited to, launching a new virtual MVPD or incorporating a joint venture partner into an existing stream. Service (e.g. Disney+ or MAX).
19. Is the joint venture expected to be required to file with the Department of Justice and the Federal Trade Commission under the Hart-Scott-Rodino Act?
Thank you for your attention to this matter. We look forward to your answers to these questions.
Sincerely,
Jerrold Nadler
United States representative
Joaquin Castro
United States representative
This is not the first anti-competitive conduct charge brought against a sports band. Some industry insiders refer to the band as “Spulu,” after another joint venture, the original Hulu. Fubo, which operates a sports-focused pay-TV service, has filed a lawsuit against its joint venture participants, with CEO David Gandler calling them a “cartel” engaged in “borderline extortion.” .
Aside from the regulatory aspects, there are questions about the potential scale of the service, which lacks major sports rights holders Paramount Global and NBCUniversal. Mr. Murdoch hinted that the new service could cost more than $50 per month and said at a Wall Street conference last month that he expected the business to have 5 million subscribers in its first five years. He also said that there are. At that level, the Pete Distad-led Service would qualify as a marginal player rather than the category killer some rivals and regulators envision.
In the absence of original streaming content, at least initially, the so-called “Spulu” will combine 14 linear network feeds from Disney, Fox, and WCD to provide pre-licensed NFL, NBA, NHL, and MLB coverage. Offers. Notably, neither Paramount nor NBCUniversal are participating in this joint venture with Disney, Fox, or WBD. Presenting the biggest possible challenge to the status quo, Netflix has entered live sports alongside fellow streamer Amazon Prime Video and his Apple TV+.
