Venu Sports May Be Dead, but the Re-Bundling Era Is Just Beginning | Analysis

After becoming a lightning rod for antitrust scrutiny, streaming service Venu Sports is dead. But with pay-TV cord-cutting showing no signs of stopping, and streamers finally starting to turn the corner on profitability, the era of “re-bundling” is just getting started. 

Venu was designed to target “cord never” households looking to find their sports all in one place, but the offering notably lacked programming from NBC and CBS and was weakened by Warner Bros. Discovery’s loss of its NBA rights. It also drew scrutiny from pay TV providers like DirecTV, Dish Network and Fubo, who argued that Venu was offering flexibility for skinnier bundles that they’d been hoping to give consumers themselves but couldn’t under previous carriage deals. Fubo ended up winning a bid to temporarily block Venu’s launch after suing over antitrust concerns. 

Despite pouring at least $400 million each into Venu — and reaching a $220 million settlement with Fubo to clear the path for the service’s launch — Fox, Disney and WBD decided they would scrap the joint venture and focus on existing products and distribution channels. The risk of further litigation from DirecTV and Dish Network parent EchoStar, who revealed on Thursday they were evaluating their options in response to the settlement, also played a role in the decision, an individual familiar with the matter told TheWrap. 

Though Venu’s end marks a victory for traditional and virtual pay TV operators, the economic pressure that led to its creation persists and the sports streaming market remains fragmented — leaving the door open for similar offerings, such as DirecTV’s recently announced MySports package. 

Legacy media companies are “never returning to the margins of the past” and need to find a digital distribution model that works by continuing to experiment with different products and bundles, former Fox Sports executive Patrick Crakes told TheWrap. 

“Unbundling the content and offering direct-to-consumer made it less profitable,” Crakes said. “We’re moving towards a system that’s going to feature — at least in the short, medium run — more challenging margins and less growth, because choice creates competition and fractionalizes. The bundle is still viable, but it ain’t what it used to be.” 

He warned that consumers need to get used to not being able to get everything they want in one place and that the re-bundling process will be “painful for a while.” 

“In three years, it probably won’t be what it looks like today,” Crakes added. “But you can’t get to a better system unless you start putting things out there to see how they work, how you put them back together, what you eliminate and what you keep.”

Out with Venu, in with MySports

Following Venu’s death, DirecTV said it looked forward to working with programming partners to “compete on a level playing field to deliver sports fans more choice, control and value all-in-one experience.” And on Tuesday, it unveiled its own sports-centric skinny bundle: MySports. 

The offering, which is available in 24 metro areas with more to come, comprises 40 sports and broadcast channels, including ACC Network, Big Ten Network, DIRECTV 4K Live, DIRECTV 4K Live 2, ESPN, ESPN2, ESPNews, ESPNU, Fox Sports 1, Fox Sports 2, Golf Channel, MLB Network, NBA TV, NFL Network, NHL Network, SEC Network, TBS, TNT, TruTV and USA Network, as well as stations owned and operated by ABC, Fox and NBC. Additional networks, local stations and ESPN+, will be included at no extra cost in the near future and customers will also have access to its new free, ad-supported streaming offering, MyFree DirecTV. 

The satellite TV giant also previously struck a new carriage deal with Disney, which will allow it to create other skinny bundles for entertainment and kids and family programming — inclusive of Disney’s linear networks along with Disney+, Hulu and ESPN+.

MySports will cost $70 per month — well above the $43 charged by Venu — but the package is “far more compelling” for sports fans that can live without regional sports networks, Lightshed Partners analyst Rich Greenfield said in a blog post. It also doesn’t include Paramount Global and CBS, though Greenfield expects them to join in the near future.  

“The key takeaway for investors should be that legacy media companies are growing increasingly comfortable with smaller bundles that do not include all of their channels. However, most of the content on those excised networks is available through DTC streaming platforms,” Greenfield said. “It appears that the legacy multichannel bundle will increasingly gravitate toward broadcast/sports/news.”

Disney pushes forward with ESPN Flagship, Fubo and Hulu + Live TV merger

Disney is prioritizing the launch of its direct-to-consumer version of ESPN, internally codenamed Flagship, set to debut this fall. The network’s programming also remains available on ESPN+, which is available as a standalone service, as a tile on Disney+ and is bundled with Disney+ and Hulu and Spectrum Select video packages. 

Additionally, Disney has entered into an agreement to acquire a 70% controlling stake in Fubo, which will allow it to continue collecting affiliate fees from Fubo’s 1.6 million subscribers, further extends ESPN’s reach in streaming and gives it flexibility for additional tiered sports offerings. 

If approved by shareholders and regulators, Fubo will merge with Disney’s Hulu + Live TV offering to create the second largest virtual multichannel video programming distributor (vMVPD) behind YouTube TV and sixth largest pay TV operator with 6.2 million subscribers in North America. It will also be available as a standalone offering and remain publicly traded. Through an amended carriage agreement, Fubo will also offer a new sports and broadcast service that includes content from ABC, ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS and ESPN+.

The Fubo deal “certainly has an air of being merely step one of a larger plan” MoffettNathanson analyst Robert Fishman previously said. And the combined entity could serve as “a vessel for further consolidation of sports and linear assets,” including those owned by Disney.

Alternatively, the deal’s structure suggests Disney would have flexibility down the road to offload Hulu + Live TV and get out of the vMVPD business if it chooses, which is a “largely unprofitable venture,” Ross Benes, senior analyst at eMarketer, told TheWrap. 

“It is generally believed that Hulu + Live TV operates at zero margins, which is a drag on the rapidly expanding DTC (Disney+ and Hulu) margins on a consolidated basis,” AllianceBernstein analyst Laurent Yoon wrote in a note to clients. As Disney looks to deliver DTC margins exceeding 10% in 2026, offloading the vMVPD business, which Yoon estimates is around $4.4 billion in long-term revenue, “would certainly help,” he added. 

But acquiring a stake in Fubo just creates more confusion for investors about the company’s longterm streaming strategy, Fishman said in a note to clients on Friday. He believes Disney would be better off terminating the Fubo deal and focusing on a skinny bundle strategy with just Hulu + Live TV.

“There are complications and limitations to changing Hulu + Live TV’s product offering that would require renegotiations of distribution contracts. And the never-ending arbitration with Comcast over the value of its one-third stake in Hulu could be another factor limiting the flexibility or communication around Hulu’s strategy,” Fishman wrote. “But if Disney was able to reach an agreement with DirecTV on packaging for its own networks, why couldn’t it push other partners to do so?”

So where does Venu’s death leave WBD and Fox?

For Warner Bros. Discovery, the death of Venu allows it to focus on Max’s sports offering as the service continues to scale and expand internationally. During its third quarter of 2024, WBD executives said momentum from its bundle with Disney+ and Hulu helped drive subscriber growth at Max. It has also struck carriage renewal deals with Charter Communications, Comcast and DirecTV. 

But WBD has a lot to lose from a skinny-bundle future, given the heavy general entertainment skew of its cable network portfolio, Fishman warned.

“Turner’s recent distribution renewals seem to imply that the company’s current suite of sports rights is sufficient to maintain key affiliate fee rates,” Fishman said. “Yet, if we are now entering an age of skinny bundles even without Venu, WBD may find itself wanting to fill some portion of the NBA-sized hole in its programming line-up as it keeps fighting for broad inclusion of its networks.”

After suing over the loss of its NBA rights in July, WBD reached a settlement with the league that will see the two parties develop new shows, while giving the entertainment company international NBA rights in Northern Europe and Latin America, excluding Mexico and Brazil. Warner also maintains rights to NASCAR, the NHL, MLB and the March Madness college basketball tournament. It acquired the U.S. rights to the French Open, renewed a multi-year agreement with All Elite Wrestling and reached a licensing agreement with ESPN for the College Football Playoff.

Fox, meanwhile, has the most work cut out for it to reorient its sports strategy in the streaming landscape as it does not have a dedicated SVOD service. It does offer some live sports channels through free-ad supported streamer Tubi, including NBA G League, as well as via the Fox Sports app.

“Although its sports are on vMVPDs, those have only replaced about 1/3 of cumulative cord-cutters the past decade,” Benes added.

In addition to its deal with Disney, Fubo executives told investors last week that they would be able to create skinnier sports, news and entertainment bundles through a similarly amended carriage deal with Fox. And a Fox insider told TheWrap that the company has “always been consistent that we would enter the DTC market.”

“We own all the rights and have the technology, so the costs to do so would not be significant,” the person said. “This has always been plan A.”

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