In August 2024, a planned “sports-first” virtual cable television product that sees FOX Corporation, Warner Bros. Discovery and ESPN parent The Walt Disney Company teaming up to create Venu Sports received a significant setback, courtesy of a Federal District Court in New York.
It was a win for Fubo, with co-founder and CEO David Gandler cheering the preliminary injunction against the three media companies handed down by the Federal District Court in New York.
Now, the battle is abruptly ending: Venu is being acquired by Disney.
Confirmation and details of the transaction arrived just ahead of Monday’s Opening Bell for the U.S. financial markets, and after Bloomberg first shared the news, citing sources.
FUBO’S HULU HOOP
FuboTV Inc. and The Walt Disney Company early Monday (1/6) confirmed that they have entered into a definitive agreement for Disney to combine its Hulu + Live TV business with Fubo, forming a combined virtual MVPD company.
Disney, FOX and Warner Bros. Discovery will make an aggregate cash payment to Fubo of $220 million.
In addition, Disney has committed to provide a $145 million term loan to Fubo in 2026 as part of the transaction.
Additionally, a termination fee of $130 million will be payable to Fubo under certain circumstances, including if the transaction fails to close due to the failure to obtain requisite regulatory approvals on the terms and conditions set forth in the definitive agreement.
“The transaction will enhance consumer choice by making available a broad set of programming offerings,” the companies said in a press release distributed just after 6am Pacific.
Like all transactions, this deal is subject to regulatory approvals, plus Fubo shareholder approval, and the satisfaction of other customary closing conditions.
Under the terms of the definitive agreement, at closing, Disney will own 70% of Fubo.
Importantly, Fubo’s existing management team, led by Gandler and investment analyst-turned-CFO John Janedis, will operate the newly combined Fubo and Hulu + Live TV businesses.
As the opening bell on the NYSE rang Monday, Fubo shares soared in value, rising by $2.15 to $3.59 per share. Valuations in that price range were last seen in October 2022. Still, Fubo stock one year earlier had topped $30 per share, and Gandler was transparent in noting across 2024 that the launch of Venu Sports would all but cripple Fubo, making profitability all but impossible.
Now, all of the scuttlebutt and verbal head-butting between litigants in a Gotham courtroom is poised to conclude, putting Venu Sports back on track and greenbacks in Gandler’s pockets. “All litigation between Fubo and Disney has been settled,” the companies said.
While Hulu + Live TV is combining with Fubo, NYSE-traded Fubo will remain a publicly traded company separate from Disney; Disney will be its majority owner. And, consumers will have an option of selecting either Fubo or Hulu + Live TV as part of the merger terms.
Meanwhile, Fubo is poised to create a new “sports & broadcasting service” featuring Disney’s ESPN and ABC networks. A new carriage agreement with Fubo will allow this to come to fruition.
The combined company will negotiate carriage agreements with content providers for both Hulu + Live TV and Fubo services independently from Disney.
“We are thrilled to collaborate with Disney to create a consumer-first streaming company that combines the strengths of the Fubo and Hulu + Live TV brands,” Gandler said. “This combination enables us to deliver on our promise to provide consumers with greater choice and flexibility. Additionally, this agreement allows us to scale effectively, strengthens Fubo’s balance sheet and positions us for positive cash flow. It’s a win for consumers, our shareholders, and the entire streaming industry.”
Justin Warbrooke, Executive Vice President and Head of Corporate Development at The Walt Disney Company, added, “This combination will allow both Hulu + Live TV and Fubo to enhance and expand their virtual MVPD offerings and provide consumers with even more choice and flexibility. We have confidence in the Fubo management team and their ability to grow the business, delivering high-quality offerings that serve subscribers with the content they want and offering great value.”
Disney shares were up by $1.11 to $112.27 as of 9:53am Eastern.
