Every sports fan enjoys a good comeback story, and this week, it seems as if fuboTV (FUBO +0.00%) is the underdog, emerging as the unlikely winner. Shares of the sports-centric streaming TV platform soared on Monday after Disney (DIS 0.68%) confirmed reports that it is combining its Hulu-branded live-TV streaming service with fuboTV's comparable offering.
Disney isn't acquiring fuboTV to make this happen. FuboTV is not the latest Disney princess. The two media companies of divergent sizes are coming together as a joint venture that will combine Disney's Hulu-branded live-TV streaming business with fuboTV's smaller platform. Disney will retain a 70% stake in the combined operations. FuboTV will own the smaller piece, but its management team will lead the way.
NYSE: FUBO
Key Data Points
Moving the goalposts
There's a method to the Mouse-ness. Disney has run into legal resistance in its plan to form the mother of all sports-streaming apps. Its majority-owned ESPN sports programming juggernaut joined forces with Fox and Warner Bros. Discovery to introduce Venu, a streaming service that was set to launch in the fall of last year.
It never got there. FuboTV sued to block the launch of the service, arguing that it would be anticompetitive. Despite having far fewer financial resources, fuboTV succeeded this past summer to sway a judge into temporarily blocking the launch of Venu.
The injunction wasn't enough to spare fuboTV shareholders last year. The stock still plummeted 60% in 2024. It has made all of those downticks back on Monday, becoming one of the market's first stocks to double in 2025 on the surprising development.
FuboTV will drop its litigation against Venu as part of the deal, of course. Disney wouldn't be willing to cut a fledgling operator in on a piece of its streaming empire if it didn't have a grander motive. The partnership still validates fuboTV, even if the live-TV streaming market continues to attract a thin slice of the overall digital entertainment marketplace.
Image source: Getty Images.
Coming out of the huddle
Disney has come a long way with its streaming business. The direct-to-consumer segment that was generating 10-figure annual operating losses just two years ago has now turned profitable. Having to nix its sports partnership with Fox and Warner -- a change of Venu, if you will -- could have upended Disney's bullish momentum. This is the right move.
It's also important to be realistic about what fuboTV is getting here. Disney is a behemoth when it comes to streaming entertainment. There are 56 million domestic subscribers to its flagship Disney+ platform, with another 66.7 million accounts internationally. The Hulu service that offers on-demand access to a massive catalog of content across various studios has 47.4 million subscribers. FuboTV is not inheriting 30% of these large audiences.
Hulu + Live TV -- the platform that is being combined with fuboTV's sports-heavy live-TV product -- has just 4.6 million subscribers. It's a lot more than fuboTV's 1.6 million premium accounts, but together, the two services will now reach 6.2 million homes.
Live-TV streaming services were supposed to be the champions of the digital revolution. Consumers cutting the cord from cable and satellite TV operators would be able to duplicate the traditional experience through fuboTV or Hulu + Live TV. However, rapidly rising monthly subscription prices to cover the programming costs means most consumers are opting for just one or more of the cheaper on-demand streaming services like Disney+ or Hulu itself.
It doesn't mean that live TV isn't lucrative. Average revenue per user is north of $80 a month for Hulu + Live TV and fuboTV's domestic business.
FuboTV was already in better share than its 2024 stock chart may suggest. Its business keeps growing. Revenue rose 21% in its latest quarter on a 9% year-over-year jump in subscribers. Losses are narrowing, and fuboTV was modeling positive free cash flow in 2025 before this very interesting development.
At the same time, a lot of people began this new year betting against fuboTV. Nearly 12% of its outstanding shares were sold short. You can bet that a fair amount of Monday's jump is short-covering.
Disney in its corner as a majority shareholder does improve fuboTV's risk profile. The risks are still there for one of the still-smallest of the streaming service stocks -- but Disney has a funny way of delivering fairy-tale endings.
