The Walt Disney Company and FuboTV Inc. have reached a deal to merge online television businesses, as first reported on Monday morning by Bloomberg News. This deal merges Disney’s Hulu + Live TV entity with Fubo and forms the second-largest digital pay television provider in the United States with over 6.2 million subscribers. Disney will own 70% of this new joint venture, while Fubo will earn the other 30% as both companies enter into this merger. Fubo’s management team, which is led by co-founder and chief executive officer David Gandler, will operate this newly combined business. This deal does not include the Hulu streaming video on demand business, which has 47.4 million subscribers according to the latest quarterly earnings report from Disney.
Under the terms of the agreement, Hulu + Live TV and Fubo are continuing to operate under two distinctive brands. Moreover, Fubo has settled all legal claims against Venu Sports, the attempted joint venture from The Walt Disney Company, FOX Corporation and Warner Bros. Discovery to create a centralized streaming optionality for sports fans. Venu Sports was unable to launch prior to the football season after Fubo earned a preliminary injunction upon expressing antitrust concerns. The three media conglomerates will make an aggregate cash payment to Fubo of $220 million, while Disney provides it a $145 million term in 2026 as part of the deal.
“We are thrilled to collaborate with Disney to create a consumer-first streaming company that combines the strengths of the Fubo and Hulu + Live TV brands,” Gandler said in a statement. “This combination enables us to deliver on our promise to provide consumers with greater choice and flexibility. Additionally, this agreement allows us to scale effectively, strengthens Fubo’s balance sheet and positions us for positive cash flow. It’s a win for consumers, our shareholders, and the entire streaming industry.”
Fubo, which has a market capitalization of about $481 million, would remain publicly traded under the deal, according to the report. The company has encountered challenges in its operation related to programming costs, subscriber churn and outside competition. The virtual multichannel video programming distributor (vMVPD) provides users with an alternative to cable, satellite and/or fiber television as cord cutting continues in the United States. Hulu + Live TV is another alternative to cable television, offering approximately 100 live television channels spanning genres such as sports, news and entertainment.
“This combination will allow both Hulu + Live TV and Fubo to enhance and expand their virtual MVPD offerings and provide consumers with even more choice and flexibility,” Justin Warbrooke, executive vice president and head of corporate development for The Walt Disney Company, said in a statement. “We have confidence in the Fubo management team and their ability to grow the business, delivering high-quality offerings that serve subscribers with the content they want and offering great value.”
Fubo had communicated to the court that if Venu Sports had successfully launched, it would run out of money by the fiscal first quarter and result in insolvency. Furthermore, it argued that Disney, FOX and Warner Bros. Discovery would be bundling 60-80% of the live sports streaming rights in the United States if the joint venture was allowed to proceed. The three media conglomerates are reportedly planning to ask the U.S. Court of Appeals in oral arguments on Monday to reverse the ruling pertaining to the launch of Venu Sports, according to Dawn Chmielewski of Reuters.
As part of the deal, Disney is entering into a carriage agreement with Fubo that allows the streaming provider to create a sports and broadcast service. This category will include sports and broadcast entities from Disney, including ABC, ESPN, ESPN2, ESPNU, SEC Network, ACC Network, ESPNews and ESPN+. Aside from the aforementioned term loan, a $130 million termination fee will be payable to Fubo under certain circumstances, including if this transaction fails to close due to being unable to obtain requisite regulatory approvals.
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