Shifting priorities, a transforming media environment, constant legal battles, and the passage of time have all contributed to the downfall of a collaborative effort known as Venu Sports.
Among Venu’s three major media allies, Fox appears to come out ahead, according to some analysts. Warner Bros. Discovery finds itself back at square one. Disney has made its operations more complex, though this could be advantageous in the long run. Meanwhile, the smaller player Fubo, whose delays hindered Venu’s launch until it was too late, now finds itself flush with new funding and Disney as a potential major stakeholder.
The saga of Venu spanned a whole year. It was in early February 2024 when the three media behemoths announced the creation of Venu Sports. Shortly thereafter, Fubo filed an antitrust lawsuit and successfully obtained a temporary injunction to prevent Venu’s planned debut in August. Despite the ongoing legal proceedings, the partners spent tens of millions of dollars, hiring staff, developing infrastructure, and setting prices.
Video Update
Last Monday, the trio resolved the Fubo lawsuit with a $220 million settlement, paving the way for Venu. In a surprising twist, Disney also decided to merge its Hulu + Live TV service into Fubo, acquiring a 70% stake in the newly expanded, publicly traded entity—a move that caught everyone off guard. Yet, just yesterday, the partners unexpectedly dissolved their joint venture.
“After thorough deliberation, we have unanimously decided to terminate the Venu Sports joint venture and will not proceed with launching the streaming service. In a rapidly evolving market, we concluded that it was more beneficial to focus on our existing products and distribution networks to meet the changing demands of sports enthusiasts,” they announced.
“This marks the end of a year filled with strategic decisions that more often than not left us with more questions than answers,” noted MoffettNathanson in a memo on Friday.
The initial buzz surrounding Venu was undeniable. Whether you loved or hated the idea, it represented a novel approach—an MVPD for the digital era—in an industry that urgently needs innovation. However, as the legal challenges dragged on, with a trial not set until the fall of 2025, the initial excitement dwindled.
In the meantime, Disney shifted its focus to launching its ESPN+ flagship service, diverting attention away from Venu. Warner Bros. Discovery lost its NBA coverage, reducing its contributions to the venture. Fox, traditionally cautious about subscription video on demand, remained skeptical. Fox CEO Lachlan Murdoch had projected a modest five million subscribers for Venu within five years, indicating modest expectations for the service. The landscape shifted as Disney and DirecTV negotiated skinny bundles during a carriage renewal. Throughout 2024, executives from the partnering companies sounded progressively less hopeful about Venu’s prospects during earnings calls and investment conferences, though they never expressed outright pessimism.
Joint ventures are notoriously challenging under the best circumstances, as exemplified by Hulu. After prolonged negotiations over pricing, Disney finally acquired Comcast’s stake. This ongoing saga prompts analyst Rich Greenfield to question how this will affect the still-unresolved Disney buyout of Comcast’s Hulu stake, suggesting it could influence Hulu’s valuation.
Current Developments
Now, Disney faces a decision: either double down on virtual MVPDs by sticking with the recent Fubo agreement or cut its losses and pay the $130 million termination fee. Warner Bros. Discovery finds itself essentially where it would have been regardless of Venu’s fate. Meanwhile, Fox might just have the last laugh, according to MoffettNathanson’s Robert Fishman.
Fishman highlights that no company stands to benefit more from testing the Venu model, which proposes a demand for leaner bundles, particularly ones focusing on sports and news. Given Fox’s lean lineup that already focuses on these highly viewed genres, any trimming would likely occur in other, more bloated packages. “If this scenario unfolds, the resources Fox invested in Venu could potentially multiply in returns,” he added.
According to Alicia Reese of Wedbush Securities, after Warner Bros. Discovery lost its NBA broadcast rights on TNT to Amazon in July, it had little left to offer to the new service. “The offering would have been predominantly ESPN, which Disney could provide on its own, for instance, through its upcoming ESPN flagship app, or in combination with other services. Disney’s ultimate aim is to disseminate ESPN content through as many channels as possible,” she stated. “Venu was merely one more avenue to achieve this.”
Beyond Fubo, other legal challenges were looming, notably from the nation’s two largest satellite TV providers, Dish and DirecTV, who argued that antitrust issues still existed and requested that the New York judge not approve the settlement. The combined headache and potential risk led the three companies to ultimately abandon their efforts to launch Venu.
In the end, the case would have placed not only Venu but also the broader industry practice of bundling sought-after networks with less desirable ones on trial. With the profitability of cable networks that Disney, Fox, and Warner Bros. Discovery each depend on at stake, the partners chose to cut their losses and end their joint effort.
“We look forward to collaborating with our programming partners—including Disney, Fox, and Warner Bros. Discovery—to compete equitably and provide sports fans with more choices, control, and value in a single experience,” stated DirecTV on Friday following the collapse of Venu.
For some, the future of Fubo remains uncertain. “It’s not clear whether Venu Sports’ shutdown will affect the agreement between Disney and Fubo,” Reese remarked.
Greenfield shared this sentiment, expressing surprise at the initially announced timeline of 12-18 months to finalize the deal, given its relatively modest size and the absence of FCC approval requirements. He questioned the lengthy timeframe and speculated on whether the Venu shutdown might influence it.
Fishman believes Disney should withdraw. “The best course of action, considering the events of this week, would be for Disney to exit and act as if the Fubo deal never occurred. This would allow investors to focus on a more unified sports and streaming strategy.”
Despite initially soaring, Fubo’s shares took a dive on Friday.
However, not everyone agrees with this approach considering the substantial $130 million breakup fee. Strategically, some analysts, like Paolo Pescatore, think Disney is shifting away from pay TV, making it logical to transfer Hulu Live over to Fubo CEO David Gandler and his team. This would allow Disney to concentrate on other aspects of its streaming business.
He suggested that Disney’s 70% stake in Fubo might eventually mirror the trajectory of DirecTV, which AT&T sold to TPG last year for $7.6 billion.
Dade Hayes contributed to this report
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