(Bloomberg) — The Walt Disney Co. has agreed to merge its Hulu + Live TV streaming service with FuboTV Inc. Which focuses on online sports, creating the second largest digital pay-TV provider.
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Under the deal, Disney will merge its Hulu + Live TV business into Fubo, creating a new venture that is 70% owned by Disney and the rest by Fubo, Disney said in a statement Monday, confirming an earlier Bloomberg report. With 6.2 million subscribers in North America, the new project will follow only YouTube TV.
The deal does not include Hulu’s subscription video business, where customers pay a fee to stream the content catalog at their leisure. The TV project will continue to operate under two brands: Fubo and Hulu + Live TV.
Fubo co-founder and CEO David Gandler will manage the newly combined Fubo and Hulu+ Live TV businesses.
“This combination enables us to deliver on our promise to provide consumers with greater choice and flexibility,” Gandler said in the statement. “Additionally, this agreement allows us to scale effectively, strengthens Fubo’s balance sheet and puts us in a positive cash flow position. It’s a win-win for our consumers, shareholders and the entire streaming industry.”
Fubo shares more than tripled on Monday to $4.99, the biggest jump since January 2018. Disney shares rose as much as 1.5%. Fubo, which had a market cap of about $481 million on Friday, will remain publicly traded. As the smallest virtual TV operator, it has faced challenges including expensive programming and declining subscriber numbers.
Fubo is a multi-channel virtual video distributor, which means it offers live TV channels over the Internet rather than over cable, satellite or fiber. Hulu’s Live service, an alternative to cable TV, allows users to stream from about 100 live TV channels including sports, news and shows.
The combination of services should position the venture to attract subscribers as customers look for online alternatives to cable TV.
In connection with the deal, Disney will enter into a new carriage agreement with Fubo that will allow Fubo to create a new sports and streaming service, featuring Disney’s sports and broadcast networks, including ABC and ESPN. Fubo also has the ability to create slimmer sports news and entertainment packages according to consumers’ tastes, executives said on a call Monday announcing the deal.
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