A lawsuit filed on behalf of YouTube TV subscribers across four states accuses Disney of using its market power to unfairly jack up prices on their virtual pay TV service.
The proposed antitrust suit (opens in new tab), filed in a San Francisco federal court on behalf of YouTube TV subscribers in California, Arizona, Indiana and Kentucky, alleges that Disney uses its control of virtual MVPD service Hulu+Live TV, along with its ownership of the most coveted asset in the pay TV ecosystem, ESPN, to dictate pricing in the virtual pay TV market.
Notably, the plaintiffs contend -- correctly -- that pricing for YouTube TV has shot up from $35 a month to $65 since Disney closed its purchase of Fox entertainment assets in 2019 and concurrently seized majority ownership and operational control of Hulu in the process.
The suit alleges that there are more than 5 million subscribers for the Google-owned YouTube TV who are paying "anticompetitive inflated" pricing on their live-streaming service.
According to these plaintiffs, control of Hulu and ESPN has enabled Disney to set its own "price floor" in the vMVPD market. As Disney has regularly and inexorably raised the price of Hulu+Live TV in $5 increments over the past three years, competitors have had to follow in "lock step," the suit contends.
The market power of ESPN, the suit adds, allows Disney to force rival vMVPDs to carry the pricey channel in their basic packages.
Not only that, controversial "most favorite nation" clauses in carriage agreements between vMVPD operators and Disney dictate that when the pocket-to-pocket carriage price of ESPN shoots up on Hulu+Live TV -- or elsewhere in the ecosystem -- it must also increase across all other platforms.
"Together, these two aspects allowed Disney to reliably collect a tax on every cable TV subscription in the United States and gave Disney/ESPN the ability to increase prices without a competitive check," the suit says.
The YouTube TV suit comes as an even bigger 2020 antitrust lawsuit filed by the U.S. Justice Dept. against the vMVPD's owner, Google, is beginning to heat up (opens in new tab), with preliminary hearings beginning over the fall. ▪️
Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!
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