The Justice Department has strongly backed FuboTV in its fight against Venu, the stalled sports streaming app joint venture of Walt Disney, Warner Bros. Discovery and Fox.

In a friend of the court brief, or amicus curiae, the DOJ argued yesterday that the three pay-TV programmers’ arguments to overturn a lower court’s preliminary injunction against Venu were a “diversion” and that the proposed streaming service is a threat for the competition.

“The evidence that Defendants (Fox, Disney, and WBD) would have incentives to deny distributors like Fubo access to unbundled sports content, and ‘the market power to continue these incentives,’ indicated that the creation of Venu would significantly reduce competition can reduce. ,” DOJ argued.

The DOJ filing was echoed by a separate amicus filing from the states of New York, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and the District of Columbia.

Fubo claims that Venu stifles competition because it does not have to buy non-sports television programming, but only the fourteen sports channels from the three joint venture partners. In contrast, when the trio negotiates individually with distributors like Fubo, sports channels are bundled with entertainment and news channels. So Fubo claims that Venu is an attempt to corner the market for the so-called skinny sports bundle.

A lower court judge issued a preliminary injunction in August, days before Venu was set to launch, ruling that Fubo had convincingly argued that the app would violate the country’s antitrust laws. Fox, WBD and Disney immediately appealed the verdict, with the hearing tentatively scheduled for January 2025.

Disney, WBD and Fox argue that Venu adds to the competitive mix, and that the lower court judge incorrectly included bundling in her decision, which heavily criticized the practice. Although bundling is not at issue in the programmers’ call for the 2nd Circuit to overturn the lower court’s preliminary ruling, the practice is clearly hovering in the background.

Fubo’s main lawsuit, which is pending in the lower court, concerns bundling. And the industry is certainly reading the DOJ’s amicus brief on tea leaf bundling. The term bundling is mentioned 24 times in the DOJ’s 44-page amicus, and the word bundle 21 times, with the FBI writing: “Defendants point to the court’s comment that bundling seems ‘bad for consumers,’ but it the court’s point was that many consumers are demanding the kinds of smaller TV packages that defendants’ existing bundling practices have excluded.”

DOJ does not provide guidance if channel bundling, a decades-old practice, violates antitrust law. But the agency certainly isn’t scolding the lower court judge for ruling against the practice — unnecessarily in the opinion of pay-TV programmers.

Normally it’s a big deal when the federal government takes on a case. Whether it matters here is another matter. With a change of administration underway in Washington DC, the next DOJ could take over, or even file on behalf of the pay-TV programmers. A group of red states led by Florida has already filed on behalf of pay-TV programmers. Although she was not Florida’s attorney general at the time of that filing, Pam Bondi, the former Florida AG, is President Donald Trump’s nominee for attorney general.

Part of the legal dispute stems from a Supreme Court ruling that stated that monopolistic companies are not required to do business with distributors of the product (Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP (2001) , and Pacific Bell Telephone Co. v. linkLine Communications, Inc., (2009). This would mean that Fox, WBD and Disney would not have a duty to treat Fubo in the same way as Venu.

What the lower court held, and the DOJ supported and called a “red herring,” is that the “no duty to deal” doctrine applies only to individual companies, and not to mergers or joint venture matters.

While the appeals court may hear arguments in January, the lower court will hear arguments on motions to dismiss the case on December 13. Given the preliminary ruling of the judge, this seems very unlikely. She will also hear a motion by Fox to move his portion of the case to California.

In an earlier order, the judge noted that because of the sensitive financial information that would be discussed during the hearing, she may seal the courtroom.