On Monday, Walt Disney Co. announced plans to merge its Hulu + Live TV business with rival company and sports live-streaming service FuboTV, creating the second largest online pay-TV company in North America (after YouTube TV) with 6.2 million subscribers and about $6 billion in revenue. The new venture will be led by Fubo co-founder and current CEO David Gandler, with Disney controlling a 70% majority stake. The merger does not include Hulu’s video-streaming business and consists of a termination fee of $130 million.
Impact on the Market
The deal also clears an obstacle to Disney’s planned launch of a sports streaming venture in partnership with Fox Corp and Warner Bros Discovery, clearing the way for Disney’s growth into a lucrative new market. Wall Street reacted with excitement, with Fubo shares seeing a 260% surge Friday, reversing a long trend of decline; Fubo’s shares previously fell more than 60% in 2024 amid slowing revenue growth and more intense competition from larger rivals.
Impact on Antitrust Litigation
FuboTV had previously filed an antitrust lawsuit in February 2024 against a competing sports streaming service, Venu Sports, that was planned in partnership with Disney, Fox, and Warner Bros Discovery. Under the new agreement with Disney, Fubo asked the U.S. District Court in Manhattan on Monday to dismiss the lawsuit. The litigation settlement includes a $220 million payment in cash to Fubo from Disney, Fox, and Warner Bros Discovery; Disney has also agreed to issue Fubo a $145 million loan in 2026.
In the lawsuit, FuboTV had accused the companies of anti-competitive practices that would stifle competition for sports viewers. Due to a practice called “bundling,” which forces Fubo and other TV distributors to carry less popular and less watched networks to gain rights to higher-demand sports programming, Fubo had made the case that it had been prevented from gaining the rights necessary to create a sports-focused service on the same scale as Venu Sports. Finding Fubo’s antitrust claims likely to succeed, U.S. District Judge Margaret Garnett issued an injunction temporarily barring the launch of Venu Sports. Venu’s partners had been scheduled to appear in the U.S. Court of Appeals on Monday to ask the court to reverse the ruling.
The new deal between Disney and FuboTV was announced the same day that media giants Disney, Fox, and Warner Bros Discovery would have appeared in court. Dan Coatsworth, an investment analyst with AJ Bell, suggests, “Disney’s tie-up with Fubo looks like a way of resolving a legal spat as part of its efforts to get a sports venture with Fox and Warner Bros off the ground. It’s a step forward, but there are still more hurdles to clear to get the Venu Sports service operational.”
A New Licensing Agreement
Also announced Monday, Disney will enter into a license agreement permitting Fubo to create a service featuring Disney’s sports and broadcast networks, including ABC, ESPN, and ESPN+. Fubo CEO Gandler informed investors that the new agreement will accelerate Fubo’s long-term goal of “delivering flexible, innovative, and competitive content packages to consumers, particularly around sports.”
Ross Benes, senior analyst at Emarketer, suggests that the fact that the new product will be publicly traded under the Fubo name and run by Fubo’s CEO. “signals Disney is looking to eventually get out of being a pay TV operator and go all-in on streaming.”
After the deal is closed, Fubo and Hulu + Live TV will still be available as separate services for consumers. Fubo will focus on sports and news, while Hulu + Live TV will provide an entertainment-focused cable replacement service. Hulu + Live TV will also continue to be offered in Disney’s streaming services package, which includes Disney+, Hulu, and ESPN+.
