Dive Brief:

• The Department of Justice is eyeing an antitrust challenge to plans by Disney, Fox and Warner Bros. Discovery to launch a joint sports streaming service that the companies announced earlier this month, Bloomberg Law reported.
• By combining content from Disney-owned ESPN and ABC networks, Fox and Warner Bros. Discovery channels, the deal could lock up an estimated 55% of U.S. sports rights by cost, or about $14.4 billion of the $26.7 billion spent last year, Bloomberg reported using figures from a Citi analysis.
• Agency officials haven’t confirmed their plans to challenge the deal but if they did, they would face a tough road, Blair Levin, an analyst with New Street Research, said in a Feb. 12 note that Bloomberg reported. “We are skeptical that there is a clear antitrust case for blocking here,” he said.

Dive Insight:

Under the deal, the companies will launch a company to give consumers a single place to watch live sports events from ESPN and sister networks, the ABC broadcast network and Warner Bros. Discovery’s networks that have sports broadcasting, including TNT and TBS. Fox will include its sports content along with content from other networks it owns, including BTN, which covers some of the biggest games in college sports.

That combination means subscribers will be able to watch live professional baseball, basketball and hockey games, college basketball, Nascar races, and about half of all National Football League games.  

Disney, Fox and Warner will each own a third of the company. The expected monthly subscription price wasn’t announced, but analysts expect it to cost $45-$50 a month, although an introductory promotional price could be as low as $30 a month, CNBC reported.

Critics say the deal, if it goes through, will eventually have a negative impact on consumers, who will face higher prices to watch live sports, and on sports leagues, which will have fewer options for selling their rights, and on rival media companies. 

“They’ve made it look very consumer-friendly in terms of the access issue,” Diana Moss, vice president and director of competition policy at the Progressive Policy Institute, said in the Bloomberg report. “But as always, the devil is going to be in the details in terms of how hard they compete with each other.”

The companies have said they will continue to compete with each other for sports rights – the new service will be non-exclusive – but if competition turns out to be less than robust, the Justice Department is likely to seize on that as a basis for challenging the deal later, even if it initially approves it. 

“The reactions of those hurt by the deal may ultimately lead to a government reaction,” Levin of New Street Research said in its analysis. 

Although DOJ officials haven’t confirmed their planned investigation, people familiar with the agency’s process told Bloomberg that, once the deal is finalized, they will look at it.