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(Bloomberg) -- Antitrust officials at the US Justice Department are looking into Walt Disney Co.’s deal to take a controlling stake in streaming company FuboTV Inc., according to people familiar with the plans.
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The antitrust officials are scrutinizing whether the deal would unduly concentrate the market for sports streaming, said the people, who asked not to be named discussing the confidential matter.
In January, Disney agreed to merge its Hulu + Live TV streaming service with the online sports-focused company Fubo, creating the second-biggest digital pay-TV provider. Under terms of the transaction, Disney will own 70% of the new venture and Fubo shareholders the rest. The deal ended a lawsuit brought by Fubo against Disney, Fox Corp. and Warner Bros Discovery Inc. for their planned sports streaming service, Venu, and days later the companies scrapped plans for Venu’s launch. Disney and Fox agreed to pay Fubo $220 million to drop the suit.
Representatives for Fubo and the Justice Department declined to comment. Disney didn’t immediately respond to a request for comment. News website Puck reported earlier on the investigation. Fubo shares were down 3.5% after news of the probe. Disney shares pared earlier gains and were up 2.3%.
Senator Elizabeth Warren urged the Justice Department in February to investigate the Disney-Fubo deal, suggesting that the merger essentially was a way for Disney to avoid the lawsuit and gobble up a competitor. The Massachusetts lawmaker said the acquisition “would give Disney increased market power and incentives to increase costs for viewers, and should be regarded as another data point in Disney’s history of anticompetitive behavior.”
Fubo sued Disney, Fox and Warner Bros. last year, claiming the proposed joint venture would be anticompetitive by blocking rivals from offering similar, sports-only streaming packages. Warren raised concern about Venu last summer, warning that the new offering would dominate the market for live sports streaming.
--With assistance from Hannah Miller.
(Updates with shares.)
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