Disney potentially aids fuboTV's survival.
Underdog triumphs once more! It seems that fuboTV (FUBO, up 4.10%) is making waves this week with an unexpected win. The sports-centric streaming TV platform saw a significant surge in shares on Monday, following confirmation from Disney (DIS, 0.72%) that they are collaborating with fuboTV on a joint venture.
This venture isn't about Disney acquiring fuboTV. FuboTV isn't joining Disney's princess squad. Instead, Disney and fuboTV, despite their size disparities, are coming together as a joint venture. Disney will maintain a dominating 70% stake while fuboTV holds the smaller piece, but their management team will still be at the helm.
Moving the goalposts
The synergy behind the mouse's move is clear. Disney has faced legal hurdles in its integration plans for a significant sports-streaming app. Its ESPN sports juggernaut, in partnership with Fox and Warner Bros. Discovery, had introduced Venu, a streaming service planned for fall 2024, but never materialized.
FuboTV successfully delayed Venu's launch by convincing a judge that it could be anticompetitive. However, despite its smaller financial resources, fuboTV's victory didn't exactly secure high returns for shareholders -- a 60% plunge in 2024 persisted. However, a full recovery was experienced on Monday as the stock more than doubled.
FuboTV will relinquish its legal disputes against Venu as part of the deal. There's no doubt that Disney's backing is a nod to fuboTV's significant potential, even if the live-TV streaming market doesn't represent a substantial share of the overall digital entertainment market.
Coming out of the huddle
Disney has distinguished itself in the streaming market. The once loss-making segment is now generating profits, and a potential shift in partnerships could have threatened Disney's momentum. However, this latest move seems strategic and favorable despite seeking to combine the smaller Hulu + Live TV platform with fuboTV's offerings.
Although Disney's vast subscriber base (56 million in the US, 66.7 million internationally for Disney+) may not directly benefit fuboTV, the latter boasts over 4.6 million subscribers for Hulu + Live TV. While far from taking the lion's share of Disney's audience, the combined entities are set to serve over 6.2 million households.
Live TV streaming services may have been hyped as digital heroes, promising cable-like experiences at lower costs, but their progress has been slowed by soaring subscription fees. It's true that the ARPU (average revenue per user) for both Hulu + Live TV and fuboTV are substantial, but affordability remains a priority for consumers.
In light of fuboTV's considerable growth (21% revenue increase, 9% subscriber boost in Q4 2024), it's fair to say that the platform has a broader appeal than its recent stock performance suggests. Approximately 12% of outstanding shares were held in short positions, placing a significant weight on the stock's price before Disney's announcement.
It's an interesting development, with fuboTV's shareholders now breathing more easily as Disney enters the picture. Yet, risks remain for one of the lesser spectrum streaming platforms -- Disney, however, seems to have a knack for producing the unexpected, Happily Ever After-style stories.
[1] Disney to take control of FuboTV in streaming deal source: Bloomberg[2] Fubo TV and Disney reach a multiyear agreement to stream live sports on Disney platforms source: The Hollywood Reporter[3] FuboTV Expands its Relationship with Disney by Adding ESPN+ to its FuboTV and Fubo Extra Services source: FuboTV[4] FuboTV Joint Venture: Deal Details, Implications, and Perks source: FuboTV[5] Streaming giant Disney partners with FuboTV: Implications for media and entertainment industries source: New York Post
- Investors were pleasantly surprised on Monday when fuboTV's shares saw a significant surge, following the announcement of a partnership with Disney.
- The collaboration between fuboTV and Disney involves a joint venture, with Disney holding a 70% stake and fuboTV retaining control of its management team.
- Despite Disney's dominance in the venture, the partnership is expected to benefit both parties, as fuboTV holds a substantial number of subscribers for its Hulu + Live TV platform.
- The move by Disney to partner with fuboTV could be seen as a strategic move to enhance its live-TV streaming offerings, as the industry continues to grapple with increasing subscription fees and the need for affordability.
