(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.
As a result, Fubo settled all lawsuits with Disney and ESPN related to Venu Sports, the sports streaming platform planned by Disney and Fox Corp. and Warner Bros. Discovery Inc., removing a hurdle to rolling out the service. Venu was originally supposed to launch in the fall at $42.99 per month, but was halted due to an antitrust lawsuit filed by Fubo.
Last year, Fubo sued Disney, Fox and Warner Bros., claiming that the proposed joint venture would be anti-competitive by preventing rivals from offering similar sports-only streaming packages. A hearing is set for January 6. Venu Sports plans to provide access to live sporting events from several major leagues, including the National Football League and the National Basketball Association. It will also include content from Disney’s ESPN and Warner Bros.’ TNT networks.
Fubo, which broadcasts more than 55,000 live sporting events annually, will continue to serve subscribers on the Fubo app. Hulu + Live TV will continue to stream in the Hulu app and will be offered as part of a bundle with Hulu, Disney+, and ESPN+.
The joint venture will generate revenues of more than $6 billion upon closing, executives said on the call. In 2028, the company is expected to have revenues of more than $7.5 billion and earnings before interest, taxes, depreciation and amortization.
Venu Partners will pay Fubo $220 million in cash, according to the statement. Additionally, Disney has committed to providing a $145 million term loan to Fubo in 2026.
Wells Fargo & Co. is Fubo’s lead financial advisor and is joined by Evercore Inc. Centerview Partners LLC is advising Disney. Latham & Watkins LLP is legal counsel to Fubo and Cravath, Swaine & Moore LLP is Disney.
–With assistance from Thomas Buckley.
(Updates financial forecasts in paragraph 13.)
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