Football players may compete fiercely on the field, but the battle among sports-streaming platforms is even more intense.
Streaming platforms like Amazon Prime Video (AMZN) and Netflix have made significant strides in live sports broadcasting in recent years, securing deals with major leagues such as the National Football League, National Basketball Association and WWE.
These deals signaled their entry into live-sports streaming, a space that had long been dominated by conventional broadcasters.
Disney, which owns longstanding sports brand ESPN, is doubling down on its efforts.
On Jan. 6 Disney (DIS) said it would merge its Hulu + Live TV business with a smaller rival, FuboTV (FUBO) , forming a joint virtual multichannel video programming distributor.
The combined entity will have 6.2 million subscribers in North America, making it the second-largest digital pay-TV provider after Alphabet’s (GOOGL) YouTube TV, which has roughly 10 million subscribers.
Fubo stock more than tripled on Jan. 6 following the news, closing at $5.06 a share. Disney will own 70% of Fubo after the deal is finalized.
As part of the agreement, Fubo has settled all litigation with Disney related to Venu Sports, the sports streaming platform planned by Disney, Fox Corp., and Warner Bros.
It’s a win-win deal
FuboTV, which specializes in streaming live sports, has built a loyal customer base as it streams more than 55,000 live sporting events annually.
By merging, Disney can leverage Fubo’s expertise and audience, enhancing Hulu + Live TV’s sports offerings, analysts say.
This could strengthen Disney’s competitive position against players like Amazon Prime Video and Netflix, (NFLX) which are also expanding in live-sports streaming.
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Moreover, as part of the agreement, Fubo has settled all litigation with Disney related to Venu Sports, the sports-streaming platform planned by Disney, Fox Corp., (FOX) and Warner Bros. Discovery.
In a lawsuit filed last February, FuboTV accused the three companies behind Venu of using practices aimed at undermining competition.
“Disney’s tieup with Fubo looks like a way of resolving a legal spat as part of its efforts to get a sports venture with Fox and Warner Bros. (WBD) off the ground,” an AJ Bell investment analyst, Dan Coatsworth, told Reuters.
Under the litigation settlement, Disney, Fox and Warner Bros. Discovery will pay Fubo $220 million cash, with Disney also providing a $145 million term loan in 2026.
For Fubo, which has faced persistent cash burn, this deal offers much-needed funds to keep things running.
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The deal could pave the way for positive cash flow, which has eluded the company. In its most recent quarter, Fubo reported negative free cash flow of $3.3 million.
The combined company formed by Disney and Fubo is expected to be financially robust and generate positive cash flow immediately after the transaction closes, analysts say.
Analyst raises FuboTV stock price target
After the news, Roth MKM more than doubled its FuboTV price target to $4.75 from $2 with a neutral rating, according to thefly.com.
The combined company is expected to benefit from improved economies of scale and greater content flexibility, reducing risks around Fubo, including litigation, Roth said.
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The firm also highlighted the financial support Fubo will receive from Disney, Fox and Warner Bros. Discovery as part of the deal.
However, Roth MKM remains cautious on Fubo stock. It stays neutral, awaiting clearer evidence of organic subscriber growth under the new business structure.
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