Jan 9 (Reuters) - U.S. satellite TV provider DirecTV on Thursday challenged a dismissal of FuboTV's lawsuit against Venu Sports, the streaming service planned by Walt Disney, Fox and Warner Bros Discovery, saying it does not resolve antitrust issues around the joint venture.

DirecTV's challenge marks the latest development in a battle between media companies for dominance in the pay TV market.

FuboTV sued the three media giants behind Venu in February last year, claiming the sports streaming venture would reduce competition and increase prices for consumers. The deal was temporarily blocked by a U.S. judge in August. On Monday FuboTV asked the U.S. District Court in Manhattan to dismiss its lawsuit against Venu after Walt Disney said it would merge its Hulu + Live TV business with FuboTV, creating the second-biggest digital pay-TV provider.

Under the litigation settlement, the companies will pay Fubo $220 million in cash, with Disney also committing to a $145 million term loan for Fubo in 2026.

Disney will enter into a licensing agreement that would allow Fubo to create a sports-focused service featuring Disney's sports and broadcast networks including ABC and ESPN, as well as ESPN+. But in a letter to U.S. Judge Margaret Garnett on Thursday, DirecTV said that the settlement "restores an anticompetitive runway for the JV (joint venture) defendants to control the future of the live pay TV market."

Satellite TV provider EchoStar wrote a similar letter on Tuesday.

"By this settlement, defendants pay off and seek to subsume the very competitor that raised these antitrust violations to the Court," DirecTV said.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Nia Williams) ((mailto:HarshitaMary.Varghese@thomsonreuters.com;))