Story Stocks®

Updated: 06-Jan-25 14:18 ET
FuboTV scores huge win with new Disney agreement, transforming it into sports streaming force (FUBO)
Sports streaming company FuboTV (TV), which has been crushed under the weight of a fiercely competitive market that includes heavyweights such as Walt Disney's (DIS) ESPN and Fox Corporation (FOXA), is experiencing an unexpected revival today. After seeing its stock languish below the $2 mark for most of last year, FUBO is starting 2025 off with a bang as its shares skyrocket higher after entering into a definitive agreement with DIS that dramatically transforms the company from a "left for dead" name into a force in the sports streaming space.

Given FUBO's struggles and poor financial track record -- the company has never posted a profitable quarter in its history -- it may seem surprising that a bellwether company like DIS would get tangled up with FUBO. However, the underdog FUBO may have had an ace up its sleeve that forced DIS's hand, pushing the entertainment giant to take a 70% ownership stake in FUBO and agreeing to combine its Hulu + Live TV product with FUBO's sports offerings.
  • Last February, FUBO filed an antitrust lawsuit against DIS, FOXA, and Warner Bros. Discovery (WBD), alleging that their new sports streaming service called Venu unfairly blocked FUBO out from offering some of its sports content on the new platform. Fast forwarding to this past August, FUBO scored a win after a judge granted a preliminary injunction to block Venu's launch as the lawsuit continued, adding that Venu would substantially lessen competition.
  • Rather than taking a litigation risk that could potentially sink the Venu joint venture, DIS instead hammered out an agreement with FUBO in which FUBO will drop all outstanding litigation related to Venu Sports, thereby paving the way for DIS, FOXA, and WBD to launch their service. In exchange, those three companies have agreed to pay FUBO $220 mln, while DIS also committed to providing FUBO with a $145 mln term loan in 2026.
  • That payment is just the cherry on top, though, for FUBO. By combining with Hulu + Live TV, the company's North American subscriber base is expected to soar to 6.2 mln and its revenue is projected to surge to over $6.0 bln. For some context, FUBO guided for FY24 paid subscribers of 1.665-1.705 bln and revenue of $1.58-$1.60 bln when it reported Q3 results on November 1.
  • FUBO will also have access to ESPN and ABC, enabling it to create a new sports and broadcasting service with DIS's channels representing the centerpiece of that service. It's worth noting that DIS has plans to launch a new Direct-to-Consumer sports package later this year that could further benefit FUBO.

The main takeaway is that this agreement with DIS is truly a game changer for FUBO, reviving a beaten-down name into a real power in the sports streaming industry.

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