By Don Chmielewski and Jack Quinn
(Reuters) – A U.S. judge on Friday temporarily blocked the launch of a new sports streaming service backed by three media giants, Walt Disney Co and Amazon. Disney (NYSE:), Fox, and Warner Bros. Discovery (NASDAQ:), which aim to attract younger sports fans who don’t watch games on TV.
In February, rival sports streaming service FuboTV (NYSE:FB) sued major media companies, accusing them of monopolistic practices that stifle competition and raise prices for consumers. A judge found it likely to succeed on its antitrust claims and issued an injunction.
The media companies were planning to launch the Venu Sports app, which would aggregate thousands of live professional and college sports events into one app. The new service was slated to launch this fall.
“If the joint venture is allowed to proceed, it will be the only option on the market for television consumers who want to spend their money on multiple live sports channels they love to watch, but not on unnecessary entertainment channels they don’t like,” U.S. District Judge Margaret Garnett wrote.
Garnett wrote that Venu’s media partners could “exercise near-monopolistic control” over sports rights to prevent competitors from emerging, adding that the joint venture partners “have explicitly agreed to ‘stay away’ from supporting another platform” like Venu “for at least the next three years.”
Fubo says it is frustrated at its ability to launch a purely sports service because the media companies that provide its content have forced it to carry “unwanted non-sports networks that its consumers rarely watch.”
“We’ve definitely been hurt over the past year,” Fubo CEO David Gandler told Reuters. “The stock has not recovered to the price we were at before the Fino announcement.”
The three companies said in a statement that they believe Fubo’s arguments are wrong and that they will appeal the court’s ruling.
“Venu Sports is a competitive option that aims to enhance consumer choice by reaching a segment of viewers currently underserved by existing subscription options,” the company said in a statement.
If Venu had to launch its product late in the NFL season, it could lose potential customers, said e-marketing analyst Daniel Konstantinovich.
The cost of professional sports rights continues to rise because such games still attract huge audiences and the advertisers they hope to reach. The National Basketball Association, for example, reached an 11-year, $77 billion broadcast deal.
One way media companies can afford this is to attract new viewers, such as those who eschew traditional television in favor of streaming services.
“To compete with Netflix (NASDAQ:), companies will increasingly need to collaborate on different strategic bundles and partnerships,” said Brandon Katz, chief entertainment industry strategist at Parrot Analytics. “Companies must cut costs and remain competitive in a challenging streaming space at a time when traditional media is desperate to replace lost revenue from the declining pay-TV bundle.”
“In the absence of an injunction, Vobo has presented clear evidence that it faces an imminent loss of subscribers, likely to be followed by bankruptcy, delisting, and the collapse of its business,” Judge Garnett said in New York.
Shares of Disney, Fox and Warner Bros. Discovery were flat in after-hours trading on Friday, closing up between 0.5% and 2.4%.