Disney said on Monday it will merge its Hulu + Live TV business with rival FuboTV — a deal that potentially paves the way for the launch of its stalled sports broadcasting venture with Fox Corp and Warner Bros Discovery.
The combined company will create the second largest online pay TV provider in North America, behind YouTube TV, with approximately $6 billion in revenue and 6.2 million subscribers.
Disney, led by Bob Iger, will hold a 70% majority stake in the venture, which will be led by Fubo CEO and co-founder David Gandler.
As part of the settlement, Fubo asked the US District Court in Manhattan on Monday to drop its lawsuit against the media giants behind Venu Sports, the sports package that was supposed to launch last fall.
Under the court settlement, the companies will pay Fubo $220 million in cash, with Disney also committing to a $145 million term loan to Fubo in 2026.
“Disney’s tie-up with Fubo looks like a way to settle a legal wrangle as part of its efforts to launch a sports venture with Fox and Warner Bros,” said Dan Coatsworth, an investment analyst with AJ Bell.
“It’s a step forward, but there are still more hurdles to clear to get the Venu Sports service up and running.”
Spokesmen for Warner Bros. Discovery and Fox declined to comment.
Shares of Fubo, which had a market value of about $480 million as of Friday’s close, rose 251% to $5.06. Disney was downsized.
The deal does not include streamer Hulu, home of original series such as “Only Murders in the Building” and “The Handmaid’s Tale,” which competes with platforms such as Netflix, Amazon Prime Video and Apple.
However, the new venture will give customers the ability to stream a wide range of live broadcasts and cable networks on their connected TVs, mobile phones, tablets and other internet-connected devices.
“This combination enables us to deliver on our promise to offer consumers greater choice and flexibility,” Gandler said of the merger.
“In addition, this deal allows us to scale effectively, strengthens Fubo’s balance sheet and positions us for positive cash flows. It’s a win for consumers, our shareholders and the entire broadcast industry.”
Hulu + Live TV will continue to stream on the Hulu app and will be offered as part of a bundle with Hulu, Disney+ and ESPN+. Fubo, which broadcasts more than 55,000 live sports events every year, will continue to serve its subscribers on the Fubo app.
The deal ends a bitter legal battle that had blocked Disney, Fox and Warner Bros. Discovery by launching its own sports-focused streaming provider.
FuboTV, in its lawsuit filed against the three companies last February, had accused Venu’s partners of engaging in anti-competitive practices that would hinder competition for sports fans.
At issue was a practice known as “bundling,” in which television distributors like Fubo are forced to carry networks that “consumers rarely watch” in order to gain rights to prized sports programming. Fubo argued that it was unable to acquire the rights to create a sports-centric service in the mold of Venu.
As part of Monday’s announcement, Disney will also enter into a new carriage agreement with Fubo that will allow Fubo to create a new sports service featuring Disney’s sports and broadcast networks including ABC, ESPN, as well as ESPN+ .
“The new product will be publicly traded under the name Fubo and will be led by its CEO,” said Ross Benes, senior analyst at Emarketer. “This signals that Disney is looking to finally move away from being a pay-TV operator and move into full broadcast.”
The deal includes a $130 million termination fee.
By postal wire
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