(Photo by Ric Tapia/Getty Images)
Let the 2025 Hollywood Consolidation Derby begin! Fubo, the sports-minded upstart online replacement for traditional cable television, said it will merge operations with those of Disney-owned competitor Hulu+Live TV, and settled its lawsuit that had stalled the launch of Venu, a sports-focused “skinny bundle” from Disney, Fox and Warner Bros. Discovery.
The string of announcements show the importance of sports programming, as the most valuable content on traditional broadcast and cable is only getting more so. Not only have those outlets invested heavily in new rights deals with the NFL, NBA, college athletic conferences and other sports, so too have Amazon, Apple, and Netflix, which scored big viewership for two NFL games on Christmas Day. Netflix also kicks off its carriage of the WWE Raw live weekly pro wrestling show tonight.
Fubo shares leapt upward Monday morning on news it would merge with Hulu + Live TV.
Fubo shares more than tripled on the day, from around $1.40 per share last week to close Monday at $5.06.
Disney, meanwhile, will control 70 percent of the merged company, and will get broader carriage and ad inventory for its programming.
“Starting the year, it’s sports, sports, sports,” said CEO Mark Douglas of MNTN, a connected-TV advertising platform. “Disney kind of gets a free play here. They don’t have to build it, they just have to invest in it and get 70 percent.”
The merged Fubo-Hulu operation, “Hubo” in some analysts’ neologism, will create a much sturdier challenge to Google-owned virtual MVPD YouTube TV, which has its own significant sports investments including the NFL’s Sunday Ticket package. The Hubo offering, if approved by regulators, will have a combined 6.2 million live streaming subscribers, compared to YouTube TV’s 8 million subscribers, according to most recent earnings reports.
“It significantly intensifies the competition in the space,” Fubo co-founder and CEO David Gandler said in a CNBC interview after the announcement. “We’ll be able to negotiate better deals, and have more packaging flexibility.”
Gandler said that the company had negotiated amendments to its carriage agreements, which will allow it to offer a broader range of programming packages.
“We want to provide different price points along the demand curve,” Gandler said. “Everyone is looking for ways to ensure they remain at the top.”
A broader range of programming packages could capture bargain-hunting consumers and perhaps even entice some so-called “cord nevers” to subscribe.
“As I’ve always said, our goal has always been to provide value to consumers,” Gandler said. “I personally initiated the deal. I thought it was a good idea.”
The merger should be a big cost-saver, Gandler said.:“Together we’ll be able to focus on content costs, advertising optimization and marketing efficiencies,” giving the bigger company more leverage in negotiations with networks and advertisers.
The deal’s many components also bring $220 million in capital, and a $140 million term loan, to beef up the combined company’s bottom line. Gandler will remain as CEO.
Not to be lost in the deal is Disney’s muscular push into sports programming across a range of distribution outlets. It already has NFL, NBA, NHL, college sports and other rights on broadcaster ABC and cable king ESPN.
Disney has operated an undernourished subscription streaming service, ESPN+, for some years and has committed to launching a full online app version of ESPN later this year, likely before the football season starts in August.
The Fubo merger creates another digital approach to sports-dominated video programing, but yet another initiative, Venu, now can finally move forward. The so-called “skinny bundle” features sports and entertainment networks of Disney, Fox and Warner Bros. Discovery. It’s been stuck in legal limbo since September, when a judge granted Fubo an injunction preventing Venu’s launch.
“This clears the path for all the different threads Disney has,” said Barton Crockett, managing director and sr. research analyst at Rosenblatt Securities, “They’ve got every way under the sun to get sports in front of you. They’re free to run and have lots of ways to go at it now.”
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