MW Fubo's stock skyrockets as Disney Hulu + Live TV deal creates YouTube TV rival

By James Rogers

The new virtual multichannel video programming distributor will have a combined 6.2 million North American subscribers

Shares of FuboTV Inc. skyrocketed Monday after the company announced a deal to combine Walt Disney Co.'s Hulu + Live TV service with Fubo.

After soaring in premarket trading, Fubo's stock was up 181.3% at 11:17 a.m. Eastern time. By merging Hulu + Live TV with Fubo, the companies are looking to forge a stronger entity to challenge Google's $(GOOG)$ $(GOOGL)$ YouTube TV.

The combined business will operate under the Fubo $(FUBO)$ publicly traded company name and be led by the existing Fubo management team, the companies said in a statement. Disney $(DIS)$ will become the majority owner of the resulting company, with 70% ownership.

Related: Fubo's stock gains again after judge blocks Disney-Fox-WBD sports streaming bundle due to 'near-monopolistic' concerns

The new virtual multichannel video programming distributor will have a combined 6.2 million North American subscribers, the companies said. Fubo and Hulu + Live TV will continue to be available to consumers as separate offerings.

As part of the deal, all litigation between Fubo and Disney has been settled.

Fubo had been involved in legal action against Disney, Fox Corp. $(FOX)$ $(FOXA)$ and Warner Bros. Discovery Inc. (WBD) over the Venu Sports streaming service. Fubo had argued that the service from Disney, Fox and Warner Bros. could reduce competition.

Related: Joint streaming venture involving ESPN, Fox, Warner will be called Venu Sports

Disney shares were up 1.3% at 11:17 a.m.

In a note released early Monday, analysts Craig Moffett, Michael Nathanson and Robert Fishman of MoffettNathanson Research said that both Hulu Live TV and FuboTV had seasonal rebounds in the third quarter of 2024, albeit at a lower rate than in the prior year.

"With more down than up quarters over the past few years, Hulu Live TV has posted only very modest net gains," they wrote. "They reported only 200K subscriber net additions in [the third quarter], lower than a year ago and lower still than the year before that."

Related: FuboTV's stock dives as excessively high licensing costs led to loss of content

"FuboTV, the most sports-centric of the vMVPDs [virtual multichannel video programming distributors] and therefore also the most seasonally volatile, gained 163K subscribers in the quarter, but that, too, was substantially smaller than the 310K added in the corresponding quarter last year," they added.

The analysts explained that cord cutting is now "profoundly seasonal," noting that it follows the football season. "This is particularly the case for the vMVPDs, for which ease of disconnection and reconnection isa central selling point," they wrote. "We have now seen for years that customers disconnect after the Super Bowl and reconnect for the start of football season." The analysts acknowledged that there are fans of other sports with different seasonal patterns, and that the college football season, which largely aligns with that of the NFL, "matters a great deal as well."

Google's YouTube TV added an estimated 800,000 subscribers during the third quarter of 2024, according to MoffettNathanson Research, up from an estimated 700,000 subscribers in the prior year's quarter.

Related: FuboTV CEO slams 'pernicious' rivals Disney, Fox and WBD amid streaming lawsuit

Fox Corp. and News Corp $(NWSA)$ $(NWS.AU)$, the parent of MarketWatch publisher Dow Jones, share common ownership.

Weston Blasi contributed.

-James Rogers

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January 06, 2025 11:29 ET (16:29 GMT)

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