In the declining world of linear TV, cord-cutting has seen some cutthroat behavior. But things could be turning around. FuboTV (FUBO) stock soared on today by 250% after it announced a tie-up with Disney (DIS) to combine their online live TV businesses and simultaneously settle an antitrust lawsuit in relation to the planned Venu Sports streaming service. Disney will combine its Hulu + Live TV business with Fubo and become the majority 70% owner of the resulting company, the companies said in a filing on Monday. FUBO stock rallied 170% at one stage before paring gains, while DIS rallied a more modest 1%. The companies said in a statement that the new business will operate under the FUBO ticker and will be led by the existing Fubo management team.
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Fubo and Disney Join Forces to Challenge YouTube TV
The combined entity will have around 6.2 million subscribers, making it the second-largest provider of streaming services of its kind behind YouTube TV. They offer streaming services similar to a traditional cable bundle, with linear TV networks. Both services will remain available as separate packages. However, the deal does not include Hulu, which creates and streams original content such as Only Murders in the Building.
Deal Raises Antitrust Concerns over Bundling Practices
It’s unclear whether the deal could have wider ramifications for the industry. After Fubo launched an anti-trust action against Disney and partners last year, a judge ruled that bundling practices that see distributors forced to accept several channels as a package from Disney and other content companies were likely illegal. That led to a stand-off between satellite provider DirecTV and Disney, with the former refusing to stump up for all the other channels bundled in with ESPN. A resolution was reached that sees DirecTV pay Disney based on “market-based” pricing.
Under the transaction announced January 6th, Fubo has settled all litigation with Disney and ESPN relating to Venu Sports, the sports streaming platform planned by ESPN, FOX and Warner Bros. Discovery. Fubo has also settled all litigation with FOX and Warner Bros. Discovery (WBD).
FuboTV had launched an antitrust lawsuit against Disney, FOX and Warner Bros. Discovery over the venture last February, arguing that it would “destroy competition and inflate prices for consumers”. A district court judge had issued an injunction to temporarily block the launch of Venu and the three media giants will now seek the US Court of Appeals to reverse the decision.
Is FUBO a Good Stock to Buy?
Overall, Wall Street has a Hold consensus rating on FuboTV’s stock, based on two Buys, five Holds, and one Sell. The average FUBO price target of $2.38 implies about 38.2% downside potential from current levels. Shares of FuboTV have increased by more than 45% over the past year.
