Disney, Fox, WBD Invested $400 Million Each in Sports Bundle Venu

The Walt Disney Co., Warner Bros. Discovery, and Fox Sports have so far invested $400 million each in their highly anticipated sports streaming joint venture Venu, according to Fox Corp. COO John Nallen’s testimony Wednesday at a preliminary injunction hearing in FuboTV’s lawsuit against the three companies.

Nallen also disclosed that Disney, Fox, and WBD will each spend $15 million marketing Venu in its first year, separate from what Venu itself will spend.

The trio also agreed to a noncompete clause in the 36 months after Venu launches that prohibits each from entering into a similar partnership with other media companies. 

These disclosures came on the second day of a hearing on Fubo’s effort to block Venu’s launch, which is expected to happen in the coming months, if not sooner. 

“We did not want any type of noncompete,” ESPN chairman Jimmy Pitaro testified, but that’s what the three partners ultimately agreed on. “This is a compromise,” he added. When asked the reasoning behind the agreement, Pitaro said that WBD and Fox were concerned Disney’s ESPN could form a similar venture with NBC and CBS, two big rights holes in the Venu offering. 

Disney and Fox had talks last summer about their own dual bundle, not including WBD, that would have cost $22 and a potential audience of more than 30 million, with 87% of the subscribers coming from pay TV, according to Disney research presented at the hearing. Nallen also revealed Fox studied doing one with only WBD that would have had a projected 15 to 20 million subs.

Fubo views Venu as an existential threat that could strip nearly 30% of its 1.4 million subscribers, Fubo founder David Gandler testified. Its lawsuit alleges Venu violates antitrust laws because the three media companies are licensing sports-only channels to the new app—something they will not replicate with other platforms like Fubo, which must buy non-sports channels to get access to sports.

Pitaro initially testified that Venu does not wish to cannibalize pay-TV distributors like Fubo because ESPN earns more from subscribers (via cable and virtual distributors) than it will from Venu. But when a lawyer for Fubo pointed to internal ESPN research from January (handed over in the discovery process) that projected two-thirds of Venu’s projected five million subs by 2029 will come from pay TV, Pitaro conceded the finding. 

He reiterated that Venu hopes not to cannibalize pay-TV distributors.

The injunction hearing, originally scheduled to end Friday, will now run into Monday. Judge Garnett indicated she would not rule from the bench but will take post-proceeding motions before her decision.