Disney Antitrust Suit Over Hulu, ESPN Ownership Moves Forward

Media company Walt Disney Co DIS is betting on future growth coming from its sports and streaming ambitions.

These two units could prove troublesome with an antitrust suit moving forward.

What Happened: Disney is the majority owner of streaming platform Hulu, with plans in place to acquire the remaining stake it doesn't own from minority owner Comcast Corp CMCSA.

Ownership of Hulu and sports channel ESPN led to an antitrust claim from subscribers of YouTube TV, which is owned by Alphabet Inc GOOGGOOGL.

The suit alleged Disney violated antitrust rules by being both a content supplier and distributor. Filed in 2022, the suit also alleged Disney raised subscription prices for carrying ESPN for television and streaming providers.

Federal Judge Edward Davila has advanced the claim and failed to dismiss the lawsuit, as reported by The Hollywood Reporter. The judge found Disney may have used its leverage of ownership of Hulu and ESPN to be anticompetitive against rivals.

Disney was said to have raised prices once it got control over Hulu and also raised prices of ESPN for competitors to Hulu.

The allegations include DirecTV and Sling TV being forced to carry ESPN in their cheapest bundles. The lawsuit found Disney "ensured that AT&T/DirecTV Now" couldn't undercut Hulu + Live TV on price due to increased rates for ESPN.

Related Link: Walt Disney Q2 Earnings: Profit Beat, Moderating Parks Growth, Password-Sharing Crackdown And More

What's Next: According to the report, while the antitrust claim will move on, the YouTube TV subscribers will not be able to seek damages in the class action suit.

The YouTube TV subscribers will be able to seek a court order to block Disney from future violations of the antitrust laws. The subscribers can also recover money from state competition violations and consumer protection laws.

As The Hollywood Reporter wrote, Disney's role as content supplier and distributor has been put into a bigger spotlight since the Hollywood strikes.

The Writers Guild of America argued that Disney's acquisitions of Pixar, Marvel and Lucasfilm led to price hikes for the company's streaming services.

The future ruling in the case could be widely watched by the media and streaming sectors as it could impact future acquisitions and partnerships on streaming platforms.

DIS Price Action: Disney shares trade at $102.18 versus a 52-week trading range of $78.73 to $123.74. Disney stock is up 15% over the last year.

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