Sports streaming service from Disney, Fox and Warner Discovery is under scrutiny by Congress

Mr. Robert Iger
Chairman of the Walt Disney Company

Mr Lachlan Murdoch
Chairman and Chief Executive Officer FOX

Mr. David Zaslav
Chief Executive Officer Warner Bros. Discovery

Dear Mr. Iger, Mr. Murdoch and Mr. Zaslav:

We are writing to request information about the proposed sports streaming joint venture (“the Joint Venture”) that your companies 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 like the Super Bowl and the NCAA's March Madness tournament accounted for 97 of the 100 most-watched television broadcasts in 2023. In a recent CNBC appearance, Hugh Johnson, CFO of The Walt Disney Company, stated that their companies collectively control 80 percent of this content market.

As programmers, your companies exert enormous influence over pricing across the live sports TV ecosystem. In advance, programmers negotiate content licensing agreements with sports leagues such as the National Football League and the National Basketball Association for media rights to their sporting events. Subsequently, the programmers determine the conditions under which video distribution partners may license the programmers' sports channels. Historically, distributors have primarily been multi-channel video programming distributors (“MVPDs”), such as cable and satellite television companies Comcast, DISH and DirecTV. In the streaming era, distributors have expanded to include multi-channel virtual video programming distributors (“virtual MVPDs” or “vMVPDs”) that offer services over the Internet, such as YouTubeTV, fuboTV and Sling.

Therefore, the joint venture raises the question of how this new offering would impact access, competition and choice in the sports streaming market. Without more complete information about the pricing, intent and organization of this new venture, we fear that this consolidation will result in higher prices for consumers and less fair licensing terms for upstream sports leagues and downstream video distribution companies.

To further our understanding of the joint venture, we respectfully request that you respond to the following questions by April 30, 2024. Please copy the Department of Justice information in your response.

1. Which relevant markets are affected by the joint venture?

2. How many subscribers does the joint venture expect to have within 1, 3 and 5 years of launch?

3. Will the joint venture distribute channels from non-joint venture partners?

4. How do the joint venture partners determine the prices of their own sports channels (e.g. Fox Sports, ESPN) 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 the joint venture partners implement provisions to prevent anti-competitive sharing of prices or other competitive information between each other?

7. What measures will the joint venture partners take to prevent directorate integration?

8. When will the joint venture prices be determined and announced?

9. Which League Property each Joint Venture Partner currently holds the rights to, where “League Property” means a content license agreement with one of the following companies: the NFL, the NBA, the MLB, the NHL, NCAA Basketball Tournament, NCAA Football (by major league) and NCAA Basketball (men's and women's). Which League properties do licensors other than the joint venture partners own the rights to?

10. How many hours of live League Properties events will each of the sports channels included in the new service broadcast per calendar year?

11. To what extent are customers offered the opportunity to bundle other products offered by the joint venture partners with the joint venture? Will joint venture customers be offered the opportunity to bundle the joint venture with third-party direct-to-consumer products?

12. Will the joint venture partners offer standalone streaming sports services? If the joint venture partners decide to offer independent offerings from the joint venture, how will firewalls be implemented to ensure there is no collusion between the joint venture and their independent streaming sports offerings?

13. The joint venture partners are currently bidding against each other for sports content. However, the new company will pool sports content among the joint venture partners. Will the joint venture partners continue to bid against each other for the sports rights as they become available?

14. Will the joint venture partners make the channels they include in the joint venture available to third parties on non-discriminatory terms?

15. Will the joint venture partners jointly negotiate with MVPDs for licensing of sports channels? Even with virtual MVPDs?

16. Will the joint venture partners continue to require, as a condition of their licensing agreements, that MVPDs and virtual MVPDs purchase programming other than their sports channels? When negotiating with MVPDs and other virtual MVPDs, will the joint venture partners continue to require minimum penetration for their sports and other channels?

17. Companies propose a form of vertical integration and leverage their content assets in a virtual MVPD. In previous transactions involving vertical integration between programmers and MVPDs (e.g., Comcast-NCBU, AT&T-Time Warner), the parties entered into certain commitments to bind licensing negotiations
Arbitration. Will joint venture partners make similar commitments?

18. What independent plans had each of the JV partners considered prior to the JV negotiations for making their sports channels available via streaming, including but not limited to launching a new virtual MVPD or merging into the existing one Streaming the joint venture partner? Service (e.g. Disney+ or MAX).

19. Do you anticipate that the joint venture will be required to file with the Department of Justice and the Federal Trade Commission under the Hart-Scott-Rodino Act?

We thank you for your attention and look forward to your answers to these questions.

Sincerely,

Jerrold Nadler
United States Representative

Joaquin Castro
United States Representative