Fubo’s Battle With Venu Sports Is a Stopgap Measure

Virtual pay TV provider Fubo received a temporary reprieve last week, as a federal judge issued an injunction blocking the launch of the Venu Sports streaming service at Fubo’s behest.

While the media giants behind Venu — Disney, Fox and Warner Bros. Discovery — intend to appeal, this injunction may well prevent the service from launching in time for the NFL season kickoff next month, which would mark a significant victory for Fubo and its fellow virtual MVPDs (multichannel video programming distributors).

But the reprieve granted by the court is temporary in more than one sense. The injunction may not withstand a higher court’s scrutiny; while Fubo’s antitrust case against the platform now seems stronger than it first appeared, it would not be much of a leap for another judge to buy the argument that the service will increase competition rather than reducing it.

After all, while the vMVPD argues that blocking Venu is “a victory not only for Fubo but also for consumers,” as CEO David Gandler said in a statement, consumers can hardly complain about a service that lets them consolidate some of the many subscriptions needed to stream the breadth of live sports (though Paramount and NBCUniversal are not involved with Venu — which could be another strike against Fubo in a different judge’s eyes).

Furthermore, despite this victory, Fubo is fighting a losing battle that it cannot hope to win — a battle not against Venu and its partner companies, but against the inexorable tides of the media business.

Virtual MVPDs, like their traditional counterparts, are being squeezed hard by SVOD and cord-cutting. Q2 subscriber additions this year for Fubo, Sling TV and Hulu With Live TV were down more than 70% versus just four years ago.

Of course, Fubo typically sees its biggest subscriber gains in Q3 and Q4 thanks to the NFL season (hence the rush to halt the launch of Venu). But it’s clear at this point that, for Fubo at least, the virtual MVPD business is a seasonal one: Subscribers reliably peak in Q4 each year and dip over the following two quarters.

This seasonality makes sense, as Fubo has positioned itself as a sports-centric service, a niche that is naturally threatened by the prospect of Venu.

But the joint venture is hardly the only threat to Fubo’s market power; more and more live sports are becoming available on SVOD platforms, whether through rights renegotiations or new platforms such as Disney’s direct-to-consumer ESPN product. The fact remains that, Venu or no Venu, Fubo’s position in the marketplace is becoming increasingly vulnerable.

It's therefore safe to say that blocking Venu, even permanently, would do little but buy Fubo slightly more time on the overcrowded streaming stage. What’s to stop Fox from launching its own sports-centric streaming service — a subscription tier of Tubi, perhaps? — should Venu be undone? The linear TV ecosystem is eroding, inevitably, and media companies will need to shore up their own survival somehow.

Unfortunately, there’s not much Fubo can do in that regard as that erosion continues, barring a major strategic pivot. Blocking Venu will be a stopgap measure, and it does no good to pretend it will be more than that.