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The deal will create a streaming multichannel video service that is second only to YouTube in scale, while potentially allowing the Venu service to move forward.
By Alex Weprin
Media & Business Writer
The Walt Disney Co. will merge its streaming multichannel video service Hulu with Live TV with its competitor Fubo in a surprise deal that will shake up the streaming TV business, the companies said Monday.
The new company will continue to be traded publicly under the Fubo name, however Disney will control 70 percent and appoint a majority of the board. Fubo management, including co-founder and CEO David Gandler, will run the combined venture.
The deal will do a couple of big things if and when it is completed (execs say it could take 12-18 months): For starters, it will create a much bigger player in the virtual multichannel video provider (vMVPD) space, one that can more aggressively take on the market leader YouTube TV. YouTube TV said a year ago that it had 8 million subscribers, while Hulu + Live TV had 4.6 million subscribers and Fubo had 1.6 million subscribers, giving a combined offering 6.2 million subs.
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On a conference call Monday morning, Gandler said that the combined venture will be “well positioned to fairly compete with our peers.”
After the deal closes, the company will continue to offer both Hulu + Live TV and Fubo under distinct brands, with Hulu continuing to be available in the larger Disney bundle. Fubo will negotiate carriage deals on behalf of the services, independent from Disney.
Notably, the deal will also end Fubo’s legal action against the Venu sports streaming service, potentially allowing it to proceed. Venu is the skinny streaming bundle that includes Disney’s ESPN channels and ABC, Fox and Fox Sports 1, and the sports channels from Warner Bros. Discovery.
Fubo sued and secured an injunction pending the trial, putting the service on ice for the entire NFL season.
According to the companies, Disney, Fox and WBD will pay Fubo $220 million, with Disney also providing a $145 million term loan through 2026. Fubo would also receive a $130 million termination fee if the deal fails to close under certain circumstances.
Fubo will also sign a new distribution deal with Disney, allowing it to offer a less expensive bundle build around ESPN and ABC, something close in design to what Venu was offering. Gandler says it will allow Fubo “to deliver flexible, innovative and competitive content packages to consumers, particularly around sports.”
The deal does not include the core Hulu SVOD service, and is focused only on the vMVPD offering. Gandler says that the Hulu and Fubo products could be distinct.
“One of the most important things is we are now stewards of an iconic brand, with respect to Hulu,” Gandler said on the call. “The Hulu live product, as you know, is embedded into Hulu SVOD, and so that gives us a lot of value with respect to maintaining retention. And so I think having two separate platforms today, obviously, it’s not ideal. We believe that there are synergies on the backend in areas like broadcasting and transmission, CDN, etc, but at the moment, I think we want to really focus on providing consumers with choice, and the Hulu product is really focused on providing a full entertainment bundle of sports news and entertainment, and Fubo will continue to focus on its sports first service, with the ability to launch skinnier sports bundles.”
Bloomberg first reported news of the talks.
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