The battle for influence in the live sports market is heating up among streaming platforms. Netflix NASDAQ: NFLX Has been working hard for the past few months to integrate Live Sports. Its Mike Tyson vs. Jake Paul boxing match attracted 65 million viewers and led to 1.4 million new subscribers in the following days. The company also saw record-breaking success in its broadcast of two National Football League games on Christmas Day.
Walt Disney NYSE: DIS is making a strong comeback. On January 6, D Communication services The company revealed that it will Buying a controlling stake In the sports streaming platform FuboTV NYSE: FUBO. That same day, Fubo’s shares skyrocketed by an incredible 251%. They rallied another 15% in after-hours trading. Below, I’ll explain the details of the deal as well as the significant implications for both Fubo and Disney.
Breaking down Disney and Fubo’s huge deal
Walt Disney Today
12:04 pm Eastern
- 52-week range
- $83.91
▼
$123.74
- Dividend yield
- 0.89%
- P/E ratio
- 41.30
- Price target
- $125.54
Under the terms of the deal, Disney will separate the Hulu + Live TV portion of its streaming business and combine it with Fubo to create a new company. As a result, Disney will own 70% of the company. It will continue as a publicly traded stock under the ticker symbol FUBO. Fubo management will continue to run the company; However, Disney will appoint the majority of the board of directors. The streaming services will have a combined 6.2 million subscribers in North America. This almost quadruples the number of Fubo subscribers, which is the obvious reason why the shares have skyrocketed.
A very important development is that the agreement settled all the lawsuits associated with Fubo FOX Nasdaq: Fox, Warner Bros. Discovery NASDAQ: WBDAnd Disney. The three giants were collaborating on the previously announced streaming service, Venu Sports. Their goal was to combine their live sports rights to create an industry juggernaut. This would have killed Fubo, which had less than 2 million subscribers on its own. Fortunately for this little fish, Fubo Won an early command Against Venu Launching. Fubo’s lawyers successfully argued that the three giants conspired to create a sports streaming app, which violated antitrust law. Fubo’s lawyers said that if they had not won the injunction, the company Cash will run out By the first quarter of 2025.
Is Fubo still a buy after tripling its value?
FuboTV today
12:04 pm Eastern
- 52-week range
- $1.10
▼
$6.45
- Price target
- $3.43
For Fubo, the deal is clearly a big win. We may never know, but it is possible that this was the outcome that management was hoping for with the lawsuit. Moving forward, Fubo is now also backed by Disney’s vast financial resources, exposure, and content. Fubo will be able to create a new sports and broadcast service where it can use Disney’s plethora of broadcast networks. Fubo was in a tough spot before the deal. Analysts had expected revenue growth to begin to decline sharply, and the company was still unable to turn a profit despite generating more than $1 billion in annual revenue.
Now, Fubo and Hulu may join forces to try to revive growth. Hulu was part of Disney’s streaming segment, which earned $321 million in Q4. The combined entity is now expected to be cash flow positive going forward, according to the specific call placed by the firms. It also stands the firm in great stead. However, it is still very difficult to say that Fubo stock has more room to run after this huge price increase.
FuboTV Inc. (FUBO) price chart for Tuesday, January 7, 2025
Disney: Exercising in an enviable position in live sports
With this deal, it looks like Disney messed with Fubo. Fubo dropped the lawsuit, clearing the way for Venu Sports to become a reality. Disney also plans to launch its ESPN flagship streaming service later in 2025. The combination of Venu, the ESPN flagship, and Fubo could be a formidable three-headed monster that Disney controls when it comes to live sports. Still, Disney shares did not rise that day. The company is still losing the Hulu + Live TV portion of its business, which generates about $5.3 billion in annual revenue.
Disney would not have made the deal if it believed that the loss outweighed the potential gain. Venu Sports can now move on. Given the enormous power that Fox, Disney, and Warner Bros. Discovery still collectively hold over live sports, this should be a very difficult platform to compete against. The $42.99 stated price point blows the Fubo’s $79.99 starting price out of the water. As a believer in live sports being the future of digital media, I see the deal paying off big time for Disney in the long run.
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