FuboTV Merger with Disney: Regulatory Approval in Question

NEW YORK, March 26, 2025 — FuboTV, a sports-centric live TV streaming service, has announced a potential merger with Walt Disney‘s Hulu + Live TV, setting the stage for a significant shift in the competitive dynamics of online streaming. The merger, revealed in January, would provide Disney a 70% ownership of the combined company, which will continue to operate under the FuboTV name. Together, the two streaming services boast approximately 6.2 million subscribers.

This merger also resolves ongoing litigation between FuboTV and Disney regarding alleged anti-competitive practices in the sports media sector.

Following the announcement, FuboTV’s stock surged more than 100%, exceeding $3 per share. However, uncertainty looms as the deal has yet to secure regulatory approval. The financial future of FuboTV will hinge on whether these regulators permit the merger, and the implications of that decision could greatly affect investors’ strategies.

Unlike major players like Netflix and Disney, which own a significant portion of their distributed content, FuboTV primarily operates on a licensing model, which consumes about 80% of its revenue. This model has posed challenges for FuboTV, hampering its profitability.

The merger with Disney presents two primary advantages for FuboTV. Firstly, it will gain access to Disney’s extensive portfolio of sports media assets and new carriage agreements that could help establish a competitive broadcasting service. Secondly, the combined subscriber base may leverage negotiation power for better licensing terms, thereby reducing operational costs.

Financially, FuboTV stands to benefit from a substantial cash infusion. If the merger finalizes, the company is projected to receive $220 million along with a $145 million term loan by 2026. Furthermore, a $130 million termination fee is outlined should the merger fail to materialize due to regulatory barriers.

“The financial stability provided through this merger could position FuboTV as a more competitive entity in the streaming space,” said a company spokesperson.

However, challenges remain. The company’s recent reports indicate a projected 4% decline in subscribers for the first quarter of 2025, attributed to loss of licensing rights, specifically to TelevisaUnivision. FuboTV’s operational margins are tight, primarily due to high licensing expenses, which could constrain growth.

Most investment observers agree that investors must wait for the outcome of the Disney merger to gauge FuboTV’s true business viability. Since the merger announcement, its stock price has fluctuated significantly; prior to the announcement, shares traded at around $1.50. Hence, concerns persist that rejection or modification by regulators could lead to a sharp stock decline.

“Until clearer insights emerge regarding the merger status, I would categorize FuboTV as a hold,” suggested an investment analyst. “Without Disney’s endorsement, it faces intense competition against financially robust rivals.”

Investors are reminded that FuboTV’s current operational challenges underscore the critical importance of the Disney merger in shaping its future potential in an increasingly crowded streaming market.

John Mackey, former CEO of Whole Foods Market, is a member of The Motley Fool’s board of directors and holds no stakes in FuboTV or Disney. The Motley Fool has recommendations that include both companies.