The battle for influence in the live sports market is heating up among streaming platforms. Netflix Nasdaq:NFLX I have been working hard over the past few months to incorporate live sports. The boxing match between Mike Tyson and Jake Paul attracted 65 million viewers and led to 1.4 million new subscribers in the following days. The company also saw record success broadcasting two National Football League games on Christmas Day.
Walt Disney New York Stock Exchange: Dis He comes back strong. On January 6, the communications services company revealed this Buying a controlling stake On sports streaming platform FuboTV New York Stock Exchange: Fubo. On the same day, Fubo shares rose a staggering 251%. They rose another 15% in after-hours trading. Below, I’ll explain the details of the deal, as well as the important implications for both Fubo and Disney.
Disney and Fubo’s huge deal collapses
Walt Disney today
As of 01:03 PM ET
- 52 week range
- $83.91
▼
$123.74
- Dividend yield
- 0.89%
- P/E ratio
- 41.24
- Price target
- $125.54
Under the terms of the deal, Disney will spin off the Hulu + Live TV portion of its streaming business and merge it with Fubo to form a new company. Disney will own 70% of the resulting company. It will continue as a publicly traded stock under the ticker symbol FUBO. Fubo’s management will continue to run the company; However, Disney will appoint a majority of the board members. The streaming services combined will have 6.2 million subscribers in North America. This nearly quadruples the number of Fubo subscribers, which is an obvious reason for the huge rise in the stock price.
The very important development is that the agreement resolves all Fubo-related lawsuits with FOX Nasdaq: FoxWarner Bros. Discovery Nasdaq: WPDAnd Disney. The three giants have been collaborating on the previously announced live streaming service, Venu Sports. Their goal was to combine their live sports rights to create a juggernaut industry. It would have killed Fubo, which had less than 2 million subscribers on its own. Fortunately for this little fish, Fubu He won a preliminary injunction Against the launch of Fino. Fubo’s lawyers successfully demonstrated that these three giants combining to create one sports streaming app violated antitrust law. Fubo’s lawyers said that if they had not won the injunction, the company would have won You will run out of cash By the first quarter of 2025.
Is Fubo still a buy after it tripled in value?
Fubo TV Today
As of 01:04 PM ET
- 52 week range
- $1.10
▼
$6.45
- Price target
- $3.43
For Fubo, the deal clearly represents a big win. We may never know, but it’s possible that this is the outcome the administration was hoping to achieve through the lawsuit all along. Going forward, Fubo is now also backed by Disney’s vast financial resources, expertise and content. Fubo will be able to create a new streaming and sports service where it can leverage a large number of Disney’s streaming networks. Fubo was in a very difficult position before the deal. Analysts expect revenue growth to start slowing quickly, and the company is still unable to achieve profitability despite generating annual revenues of more than $1 billion.
Now, Fubo and Hulu can join forces to try to reignite growth. Hulu was part of Disney’s streaming segment, which generated $321 million in the fourth quarter. The combined entity is now expected to have positive cash flow in the future, according to the companies’ private call. This also puts the company in a much better position. However, it’s still very difficult to argue that Fubo stock has more room to run after such a massive price rise.
FuboTV Inc. (FUBO) price chart for Tuesday, January 7, 2025
Disney: Maneuvering an envious position in live sports
With this deal, it looks like Disney is done messing with Fubo. Fubo dropped the lawsuit, paving the way for Vino Sports to become a reality. Disney is also planning to launch its streaming service ESPN Flagship later in 2025. The combination of Venu, ESPN Flagship, and Fubo could be a ferocious three-headed beast for Disney to control when it comes to live sports. However, Disney shares did not budge that day. The company would still lose the Hulu + Live TV portion of its business, which generates about $5.3 billion in annual revenue.
Disney would not have made this deal if it believed this loss was worth more than the potential gain. Venu Sports can now move forward. Given the enormous power that Fox, Disney, and Warner Bros. still have, Discovery collectively focuses on live sports events, it should be a very difficult platform to compete with. The stated price point of $42.99 blows Fubo’s starting price of $79.99 out of the water. As a believer in the increasing importance of live sports in the future of digital media, I see the deal paying off big for Disney in the long term.
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If a company’s CEO, COO, and CFO were all selling shares of their stock, would you want to know?
