FuboTV Inc. is throwing a flag on three media conglomerates' recent sports gambit.
The sports-oriented, live-streaming provider Fubo filed suit Feb. 20 to block a planned joint venture from Walt Disney Co.'s ESPN Inc., Fox Corp. and Warner Bros. Discovery Inc. The suit claims that the planned venture is taking a page from the playbook Fubo wanted to run: providing fans with a lower-priced streaming alternative to the linear pay-TV bundle.
Fubo said the same media conglomerates participating in the new sports JV have forced Fubo to carry and pay for the programmers' various entertainment networks to gain access to sports channels including FOX Sports 1 (US), FOX Sports 2 (US) and Disney's ESPN (US). The entertainment networks on Fubo include FOX News Channel (US), FOX Weather (US), Disney Channel (US), Disney XD (US) and Disney's Freeform (US).
Fubo also carries Warner Bros. Discovery's Investigation Discovery (US), OWN: Oprah Winfrey Network (US) and TLC (US), but it no longer offers Warner Bros. Discovery's sports networks in its lineup. The company's lawsuit claims the cost of adding ESPN and its sister Disney channels forced it to drop Warner Bros. Discovery sports rights holders TBS (US) and TNT (US).
Adding entertainment networks to Fubo's slate has also driven up the price of its virtual live TV packages, the company said. Fubo's English-language packages range from $79.99 to $99.99 per month.
While much remains unknown about the media conglomerates' joint venture, including pricing, its planned streaming service will carry 14 networks, comprising ESPN's suite of channels and Disney-owned ABC (US); Warner Bros. Discovery's TNT, TBS and truTV (US); FOX networks FOX (US), FS1 and FS2; and streaming service ESPN+. According to S&P Global Market Intelligence Kagan data, the sum of the affiliate and retransmission-consent revenues for the networks included is $26.34 per month. ESPN+ costs new subscribers $10.99 per month.
Analysts expect the venture to price its service at $40 to $50 per month, well below fuboTV's English-language packages. Disney, Fox and Warner Bros. Discovery did not respond to a request for comment by press time.
In its lawsuit, Fubo alleges that it has been charged above-market prices, in some cases 30% to 50% higher than the rates charged to other distributors of the same networks.
"These actions individually and collectively increase the costs Fubo must pass onto customers. Fubo believes it has incurred billions of dollars in damages as a result of the Defendants' actions," the company said in a statement.
Subscriber, financial struggles
FuboTV has struggled to grow its US subscriber base. According to Kagan estimates, it ended the third quarter of 2023 with 1.3 million domestic subscribers, up from 1.1 million in the prior-year period. Adding in Canada, Fubo reported nearly 1.5 million North American subscribers at the end of the third quarter, up from 1.2 million a year earlier. The company will report its fourth-quarter 2023 results on March 1.
Subscriber growth is not the only metric where Fubo has struggled. Revenue growth has stagnated in recent quarters, with Fubo ending the third quarter of 2023 with $320.9 million in revenue, above the $319.3 million reported in the fourth quarter of 2022.
The company's bottom line has remained consistently in the red, with a net loss of $83.8 million in the third quarter of 2023.
Unable to grow its popularity in the US or its profitability overall, Fubo's stock price has suffered.
After peaking above $52 per share in February 2021, Fubo shares began a steady descent, especially as interest rates increased and investors became more cautious. The stock has traded below $10 per share since February 2022.
The Feb. 6 announcement of the sports joint venture from Disney, Fox and Warner Bros. Discovery further dinged Fubo's stock. From Feb. 6 to Feb. 22 market close, Fubo's share price was down about 26%.
Missing from the JV
Notably, sports fans looking for national coverage of the Big 4 sports in North America — NFL, MLB, NBA, and NHL — alongside college football and basketball will not find all the games on either the conglomerates' joint venture or FuboTV.
The proposed JV's announced package excludes NFL coverage on Sunday afternoons from CBS (US) and "Sunday Night Football" from NBC (US). Fans also need an Amazon.com Inc. subscription to stream Prime Video's "Thursday Night Football" package.
Paramount Global's CBS is co-rights holder with WBD of the men's version of the March Madness basketball tournament, but the broadcast network's coverage would not be available through the JV. CBS also airs Big 10 college football and basketball, as well as golf and soccer.
NBC Sports' lineup extends to Big 10 college football and basketball, plus NASCAR and Indy Car motor racing; Premier League Soccer; golf and the Olympics.
Fubo's US sports programming gaps include men's March Madness coverage; TNT's NBA and NHL regular-season and playoff coverage; TBS's MLB game of the week and post-season coverage. WBD's sports offering also extends to US men's and women's national soccer teams.
In its lawsuit, filed in the US District Court for the Southern District of New York, Fubo asked the court to block the JV from launching. It is seeking a jury trial and punitive damages.
The US Justice Department also reportedly plans to probe whether the joint venture would violate antitrust laws.