Walt Disney Company announced on Monday (January 6) that its “Hulu + Live TV” business will merge with the smaller competitor FuboTV. This deal is expected to pave the way for the company to collaborate with Fox Corp and Warner Bros. Discovery to launch sports streaming media services.
According to Reuters, after the merger, FuboTV will become the second largest internet pay-TV company in North America, following only “YouTube TV,” with revenues reaching around $6 billion and 6.2 million users.
Disney will hold the majority stake in this joint venture at 70%. David Gandler, CEO and co-founder of FuboTV, will lead the company. The deal does not include Hulu + Live TV’s main video streaming business.
As part of the transaction, FuboTV will also drop its lawsuit against Disney, Fox, and Warner Bros. Discovery over the planned sports streaming service Venu. These companies will pay FuboTV $220 million in cash, and Disney has committed to providing $145 million in term loan to FuboTV by 2026.
FuboTV filed a lawsuit against the large media companies in February last year, alleging that the Venu business would reduce competition and raise prices, violating the U.S. Antitrust laws. A regional court judge believed that FuboTV was likely to win this antitrust lawsuit and issued a temporary injunction against the launch of Venu.
The companies stated on Monday, “All lawsuits between FuboTV and Disney have been resolved.”
FuboTV’s stock surged nearly 141% to $3.46 in early trading on Monday. As of the previous trading day’s closing, the company’s market value was approximately $480 million. Disney’s stock slightly increased.
FuboTV’s stock plummeted by over 60% in 2024 due to slowing revenue growth and increased competition from larger rivals.
As part of the announced transaction on Monday, Disney will also enter into a new broadcasting agreement with FuboTV, allowing FuboTV to create a new sports service business featuring Disney’s sports and broadcast networks, including ABC, Disney’s entertainment and sports programming division ESPN, and streaming service ESPN+ programs.
After the completion of the deal, FuboTV and Hulu + Live TV will continue to operate as independent content producers and provide services to consumers.
The transaction includes a $130 million contract termination fee.