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Cable Group Calls for Justice Department to Review New Disney/Fox/WBD Sports App

The joint venture announced this week by Disney, Fox and Warner Bros. Discovery creates an “anticompetitive sports streaming juggernaut,” the trade group for community cable operators maintained, and called for an antitrust review by the Justice Department.

“The ‘house of cards’ in the video marketplace continues to wobble,” said a statement by ACA Connects, which represents roughly 500 small and medium broadband, phone and video providers across the US.

“Allowing the biggest media players to join forces — while locking out traditional linear cable providers from offering the same package at the same price — only gives even more power and leverage to the Goliaths to extract more money from customers of ACA Connects members,” it continued.

Tuesday, the three entertainment giants announced a plan to team up on a new sports streaming service that would put ESPN, ABC, TNT and Fox Sports on a standalone app. Launching in the fall, just in time for college and NFL football.

Content will also include the NBA, WNBA, MLB, NHL, NASCAR, other college sports, UFC, PGA TOUR Golf, Grand Slam Tennis, the FIFA World Cup, cycling and more. Subscribers would have the option to bundle the product with Disney+, Hulu and Max along with subscribing directly.

Notably Warner Bros. Discovery is a member of ACA Connects.

“This clearly isn’t a functioning free market,” the ACA Connects statement said. “With customers facing higher prices and fewer affordable choices, there needs to be a level playing field.”

The group contends that the deal deserves antitrust scrutiny from the Justice Department because it will pull customers away from cable while increasing prices for the powerful entertainment companies.

“You’ve got three programmers working with each other,” said Grant Spellmeyer, chief executive officer of ACA Connects, told Bloomberg Law. “They’re excluding other programmers, and they’re excluding all the distributor networks that are out here — including small cable companies.”

The trade groups “strongly supports the Justice Department initiating an inquiry into this transaction,” Spellmeyer said.

Taking a different view, Atlanta-based Gray Television, which has stations in 113 markets reaching about one-third of the nation, suggested that such a bundle could offer opportunities, if the traditional providers are able to get a slice of the pie.

“The potential launch of a new live streaming service from Disney, Fox, and WBD that would include the live signals of the local affiliates of the ABC and Fox broadcast networks owned by local broadcasters such as Gray as well as those companies’ sports-focused cable channels could be a significant opportunity to expand the pay-TV ecosystem,” Gray said in a statement.

“We believe that including ABC and Fox stations in a new virtual multichannel video programming service could offer benefits to viewers, their local communities, and local broadcasters,” the statement continued. “Local affiliates and their audiences could also benefit if the venture provides additional resources and scale that enables the venture to compete successfully and expand the sports programming available on the ABC and Fox broadcast networks and the affiliates of those networks.”

Noting that the planned service would target viewers who don’t currently subscribe to pay-TV, Gray said it could complement wider programming offerings. “Gray welcomes any venture that expands the reach of local broadcasting stations, which in turn supports the ability of local stations to maintain trusted local news operations that benefit everyone,” the company said.

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