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Will fuboTV Win or Lose During the Disney-YouTube TV Fight?

By Rick Munarriz – Dec 19, 2021 at 12:05PM

Key Points

  • YouTube TV subscribers no longer have access to ESPN, the ACC and SEC Networks, and all the rest of the Disney-owned networks.
  • YouTube TV is lowering its prices by $15 as a result of the lack of content, but fuboTV should gain ground among cord-cutting sports fans.
  • fuboTV is growing quickly, more than doubling its subscriber base over the past year and recently topping a million active accounts.

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The live TV streaming service provider initially slips despite a blowout quarter.

There's unrest in the live TV streaming space, and it represents both an opportunity and a challenge for fuboTV (FUBO). Subscribers to Alphabet's (GOOG -0.52%) (GOOGL -0.39%) YouTube TV no longer have access to ESPN, Disney Channel, and other Disney (DIS 1.09%) media networks. The two sides couldn't come to terms to extend their carriage rights deal, and YouTube TV viewers haven't had access to Disney, FX, National Geographic, Freeform, ESPN, local ABC affiliates, and various related networks since Saturday. We're talking about roughly 18 of YouTube TV's more than 85 available online channels.

YouTube TV is the country's leading live TV streaming platform, with more than 4 million subscribers. fuboTV has just a quarter as many of those accounts on its rolls, but it's closing the gap with heady growth. You can find all of the channels that just went dark on YouTube TV over on its smaller rival, and that's obviously a good thing for fuboTV. Disney-owned content is a big part of the cable and satellite TV experience that live TV streaming services offer to cord-cutters. Without it, YouTube TV is a very incomplete platform right now. 

The challenge for fuboTV is that Alphabet's Google is now slashing the price of its monthly live TV streaming platform by $15, to $49.99 a month, to offset most of the money it's saving by not carrying Disney's iconic family, nature, and sports programming.

Will this be feast or famine for fuboTV? Let's take a closer look to see how far fuboTV has come -- and how this external event is the mother of all mixed blessings.

Friends watching a football game on TV in a living room. They're celebrating a one-handed catch.

Image source: Getty Images.

TV wars waging in the clouds   

It's been an interesting first year for fuboTV as a public company. The stock's been all over the place. It was a six-bagger at one point, but now it's resting just 66% above its debut price from 13 months ago.

Growth hasn't been a problem, and top-line gains have accelerated through each of its four quarters as a public company. The results are impressive. Revenue soared 196% in its latest quarter. Most of the gains have been the handiwork of blazing subscriber growth, up 108% over the past year. However, average revenue per user (ARPU) is also playing a starring role, with folks paying more for the live TV streaming service and improving on its industry-leading ad-based monetization. Strong growth at fuboTV can get even stronger if its new gaming and gambling initiatives pay off.

Strong growth metrics and a steady diet of "beat and raise" financial performances haven't been enough. The lack of profitability, the loss of key regional sports networks, and the competitive nature of its niche have kept bullish runs in check. The recent spike in COVID-19 cases is starting to shuffle sports programming around, and that's problematic for a streaming service that prides itself on its "sports first" approach. 

YouTube TV without Disney's massive arsenal of content will hurt the appeal of the leading live TV streaming service, but it's going to turn heads with its much lower price point than the Disney-backed competition. fuboTV still should gain more than it will lose. It will pick up some of the 4 million YouTube TV account holders who happen to be sports fans. They're not going back to cable and satellite TV. A big reason cord-cutters turn to live TV streaming services is the void of real-time sports content from the more popular premium video offerings with much larger audiences at lower price points.

YouTube TV has to know this. Whether this is a wake-up call for Alphabet's Google to get back to the negotiating table with Bally Sports for regional coverage or if it's trying to play hard-to-get with Disney as a negotiation ploy, it can't stand still. fuboTV has a golden opportunity to gain ground as a media stock just as it's adding new revenue streams.

The game's afoot, and for now at least you can't catch that game on the leading live TV streaming platform.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Rick Munarriz owns Alphabet (C shares), Walt Disney, and fuboTV. The Motley Fool owns and recommends Alphabet (A shares), Alphabet (C shares), Walt Disney, and fuboTV. The Motley Fool has a disclosure policy.

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