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Q & A Highlights

Q: With your pending Disney relationship and Disney's ESPN possibly opting out of Major League Baseball after next year, what is the opportunity for Fubo going forward with those rights? A: David Gandler, CEO: We aim to partner with all programmers and leagues, including Major League Baseball. If MLB decides to manage local sports teams, we will explore collaboration. Our relationship with Disney remains strong, and we will continue to distribute Disney channels under our existing multi-year contract.

Q: Can you discuss the relative pricing and content costs for Fubo's core service and the new sports and broadcasting service? A: John Janedis, CFO: It's too early to specify, but the pricing difference will be significant. This should widen our subscriber base. Programming costs will be lower, but more details will be shared in future quarters.

Q: Regarding the Zee Family bundle, is it an upsell opportunity for existing subscribers or a new market segment? A: David Gandler, CEO: The Zee Family bundle is not a move away from sports but an extension of our offerings. It fits our super aggregation strategy, aiming to attract customers along the demand curve. It could lead to lower acquisition costs and better retention.

Q: Can you elaborate on the advertising dynamics and expectations for 2025? A: John Janedis, CFO: The fourth quarter was impacted by the drop of Discovery and Univision. Adjusting for these, our direct business, especially in sports, performed well. Sports pricing remains healthy, but there's softness in entertainment CPMs. We expect improvement in March and early interest in the 2025 upfront.

Q: How do you view the slowdown in growth relative to the industry, and what are the avenues for reaccelerating migration rates? A: David Gandler, CEO: The U.S. market is mature, but there's still growth potential as consumers move from traditional cable to streaming. The rise of ad-supported services has changed the landscape. Our product remains competitive, and we've reduced marketing spend to ensure a healthy business. We continue to improve our offerings and expect to be more competitive over time.

Q: What insights have you gained from the Fubo free tier as a retention tool? A: David Gandler, CEO: The free tier has improved reactivation rates, with December being our best retention month. We're working on different tiers and are optimistic about our position for sustainable growth.

Q: Was there any benefit from the MSG Network's blackout at Optimum in terms of subscriber acquisition? A: John Janedis, CFO: The blackout was a Q1 event, and we saw a modest benefit. However, with the blackout resolved, we'll see if the impact has lasting effects.

Q: Were there any unusual items in operating expenses, particularly in G&A, during the quarter? A: John Janedis, CFO: There were some internal adjustments, but on a run-rate basis, G&A is expected to be in the low double-digit millions for 2025. Overall, we've seen improvements in operating leverage and cash flow.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.