Making sense of market moves
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Congrats FuboTV investors: You hit a home run before the opening bell even rang.
Shares of the underdog entertainment company skyrocketed over 250% today thanks to a deal between the virtual TV platform and Disney to create a brand new sports-focused live TV streaming platform.
The highlight reel
Disney’s Hulu + Live TV will merge with Fubo, and the combined service will have 6.2 million subscribers, making it the US’s second-biggest live TV streaming service behind YouTube TV. The new service puts Disney’s live sports programming onto the Fubo platforms, and is projected to bring in $6 billion in revenue.
The newly formed company will continue to operate under the Fubo brand, while Fubo co-founder and CEO David Gandler will lead it. But don’t be fooled by the name: Disney will own 70% of the new platform. Hulu itself will still be a standalone product.
FuboTV, while lacking the legacy brand recognition and size its competitors have leveraged, has managed to emerge as a winner in the streaming wars. With a market share of $481 million before today’s deal, Fubo struggled with losing subscribers and rising programming expenses in the hyper-competitive entertainment market. But with Disney’s wallet behind the company, those problems become relics of the past—as soon as the deal closes, the company will instantly become cash flow-positive.
The streaming playoffs
Live sports are the final bastion of old school TV in a new school world of streaming. Disney long ago planted its flag in the wide world of sports with ESPN, but that hasn’t been particularly profitable lately thanks to the rising costs of competing for content. Disney was forced to shell out billions of dollars for the rights to broadcast Monday Night Football on ESPN this season, as well as college football games on ABC, which helped cut ESPN’s profits by 6% last quarter.
But the house of mouse has no choice, with competitors shoehorning in on the action. Netflix has staked a claim in live sports this year, bringing NFL games to subscribers on Christmas Day and events like the Tyson vs. Paul boxing match a few weeks back. Amazon is doing the same, streaming Thursday Night Football games all season and, for the first time ever, a playoff NFL game in a few days.
Disney’s national sports coverage combined with FuboTV’s regional sports focus will help solidify Disney’s reach in the live sports business. In addition, FuboTV is dropping its legal action against rival Venu Sports, which it sued last February over antitrust concerns. Venu is a sports-focused streaming amalgamation from Fox, Warner Bros, and Disney.
Bundle up: Entertainment giants are slicing and dicing their businesses in so many ways that consumers are beginning to wonder how this could possibly be any better than cable. Today’s deal is only the latest chapter in the so-called “Great Re-Bundling” as streamers form cliques to survive the brutally cutthroat entertainment business.—LB