According to a press release, Disney will control 70% of Fubo. Shareholders of the sports streamer will own the remaining 30% of the combined business, which will operate under the Fubo publicly traded company name.
In conjunction with the transaction, Fubo settled all litigation with Disney, Fox (FOX), and Warner Bros. Discovery (WBD) related to Venu Sports, the planned sports streaming platform previously announced by the trio.
"On the face of it from the outside it seems as though this transaction was an elegant solution for both parties to put the pending Venu lawsuit behind them without any involved party admitting defeat," MoffettNathanson analyst Robert Fishman wrote in a note on Monday.
"The risk for Disney, Fox and Warner Bros. Discovery that moving forward with the Venu case would open bigger questions over the legality of the Pay TV industry’s 'all or nothing' strategy likely well outweighed the extra cash payments," he added.
Shares of Fubo surged nearly 250% on Monday on the heels of the announcement and continued to extend gains on Tuesday, rising as much as 20% before paring gains to a more modest 8%.
Disney stock was little changed. Fox and WBD ended Tuesday's session in the red.
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The combination of the two businesses will form one of the largest digital pay-TV providers as consumers search for cable alternatives amid increased cord-cutting.
Fubo, which offers users access to live TV channels over the internet, has primarily focused on sports and news. Hulu + Live TV, categorized as a cable replacement option — similar to YouTube TV — allows users to stream from about 100 live TV channels across sports, news, and entertainment.
On an investor call following the announcement, Fubo said the combined company is expected to "become immediately cash flow positive," with over 6.2 million subscribers in North America and over $6 billion in revenue.
Toy figures of people are seen in front of the displayed Fubo TV logo, in this illustration taken Jan. 20, 2022. REUTERS/Dado Ruvic/Illustration/File Photo ·REUTERS / Reuters
The agreement will also provide Fubo with $220 million in immediate cash, plus $145 million in committed financing available in January 2026 to enhance liquidity and ensure continued investments.
"We are delighted by today's outcomes," said David Gandler, co-founder and CEO of Fubo, who will also run the new business. "Increased scale means we have the flexibility to pursue diverse growth strategies, opening up a range of opportunities, both domestically and internationally."
Gandler added that while Fubo will continue to focus on sports and news, it will now be able to provide even more consumer options, including access to ESPN+ through amended distribution agreements with both Disney and Fox.
"Crucially, Fubo has the potential to create skinnier sports, news, and entertainment bundles according to consumer needs," he said, noting that Hulu + Live TV will remain an entertainment-focused cable replacement service.
Overall, Fubo's management team said the deal will create a "very competitive and exciting environment" and that the company is now "preparing" for its growth stage.
In a note published on Monday, Macquarie analyst Tim Nollen categorized the deal as a positive for both parties.
"Financially speaking, this combination with Fubo doesn't move the needle much, but strategically we think it's a good move to help consolidate the distribution business further, which could open up more opportunities in carriage negotiations as well as in developing more programmatic advertising," he said.
"For Fubo, it's a neat resolution to the key issues that have weighed on it for some time now — combining with Disney provides it much more scale, and resolves the Venu dispute."
Former NFL player and ESPN analyst Jason Kelce reacts during the taping of They Call It Late Night with Jason Kelce, Friday, Jan. 3, 2025, in Philadelphia. (AP Photo/Chris Szagola). ·ASSOCIATED PRESS
Last year, Fubo's antitrust lawsuit against Venu Sports alleged Disney, Fox, and WBD used their "iron grip" on commercially critical sports content to extract billions of dollars from distributors and consumers.
As a much smaller player, Fubo struggled with high content costs and the ability to curb subscriber churn and adequately compete in the marketplace — hence the lawsuit's inception.
The media giants, according to Fubo's original complaint, earned profits by "bundling" sports with less desirable content, forcing Fubo to broadcast "unwanted, expensive content" and preventing the company from offering the packages customers actually wanted.
This past summer, a judge temporarily blocked the launch of Venu, citing antitrust concerns. With Fubo now settling its litigation, the service is expected to face significantly fewer hurdles ahead of its anticipated launch.
