Venu, Fubo battle over subscribers in lawsuit hearing

A profound disagreement broke out in a federal courtroom on Tuesday over just how much consumer demand there is for Venu, the nascent sports streaming app from Walt Disney (ESPN), Warner Bros. Discovery and Fox Sports.

Digital sports broadcaster FuboTV is suing the trio over their planned app and is asking the court to enjoin the launch, which would likely otherwise occur in coming months if not weeks. Federal Judge Margaret Garnett is presiding over a four day preliminary injunction hearing featuring 19 witnesses. And it didn’t take long for matters to get testy on Day 1, with a lawyer for Fox disparaging the background of Fubo’s president.

Venu, priced at $42.99 a month , may have a modest one million subscribers by the end of the year, and five million in five years, lawyers for the company said. Half of the one million will come from cord cutters and cord nevers, they say, a point that Venu’s lawyers made repeatedly to underscore their contention the app is not a threat to nine-year-old Fubo.

But Fubo founder and CEO David Gandler testified, “There will be tens of millions of sports fans interested in this the first month… the floodgates will open as soon as the service opens.”

Gandler estimated Fubo, which has 1.4 million subscribers , would bleed 300,000 to 400,000 of them by the end of the year because of Venu. Gandler disputes that Venu’s subscribers would largely come from those who do not have a pay TV package. Sports fans are the ones largely remaining in pay TV bundles, they are the ones who will drop their services for Venu, he said.

Fubo’s main argument is that Venu violates antitrust law because it creates a skinny sports bundle (no non-sports channels) while the three media companies behind it don’t allow Fubo and others to offer the same product. They do that allegedly by requiring Fubo to take non sports channels, like Fox Business or Disney Junior, while Venu will have 14 sports only channels.

Venu’s argument is it is simply offering a supplement to an already crowded and dynamic sports marketplace. And its lawyers in painstaking fashion pointed out all the sports that Venu does not have because CBS and NBC are not part of the service.

The courtroom got frosty during Fox’s outside counsel, Andrew Levander’s, cross examination of Gandler.  Levander even called into question Fubo’s description of Gandler as an influential person in sports business because of his role, and ownership stake in Paris FC, even detailing Paris FC’s woeful performance. Later when the topic of UEFA arose, Levander threw in a gratuitous jab that Paris FC wasn’t part of it.

A clearly irked Gandler disagreed, saying Paris FC’s women’s team was part of the elite competition.

Venu gets at a problem that continues to fester with the declining cable bundle: consumers need multiple apps to find all their sports. Venu by some estimates has 55% of the U.S. sports marketplace, so it is not a panacea.

However, by adding Peacock and Paramount + to a Venu sub, a sports fan can spend about $60 a month and get nearly all sports. Gandler said Fubo costs about $90 a month. The price for Venu is $42.99 a month, though documents shown in court reveal plans to raise it $5 annually.

Venu’s lawyers played up this hole in the yet-to-launch service, saying it had only about half of the NFL’s games and some years would not have the Super Bowl. So it should not be seen as a competitor to Fubo.

A slide from Disney showed where the media giants sees Venu in the media ecosystem. On one side were cable carriers and digital carriers like Fubo and YouTube TV. Next to that was an ocean, and on the other side were players like Netflix, Amazon Prime and Hulu.

In the ocean is where Venu belongs straddling the two sides.

Mark Hansen, a lawyer for Fubo, declined during his time to use the name Venu, but instead called it Raptor, the code name the platform had during its development stage and before it was announced on February 6.

Raising his arms in front of him like a bird of prey, he said, “It is flying straight at Fubo.”

What happens if it gets there? According to Gandler it would mean dissolution ultimately in Chapter 7 bankruptcy.

The hearing is scheduled to last three more days, and is at a federal courthouse in lower Manhattan.

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