Press Release: $Hareholder Alert: The M&A Class Action Firm Investigates The Merger Of Fubotv Inc. - Fubo

Shares of the Disney gained 24.4% in 2024, narrowly edging out the S&P 500’s 23.3% gain. While Disney stock delivered great returns, what stood out was the entertainment giant’s ongoing transformation. Disney has returned to profitable growth and resumed cash dividend payments, signaling confidence in its financial health.

A key driver of this turnaround is Disney’s success in revamping its streaming business. The segment was once a significant drain on profitability. However, it has evolved into a promising source of income. Platforms like Disney+ and Hulu are witnessing solid growth, setting Disney on a path for sustained results.

The FuboTV Deal: A Strategic Move

To further strengthen its direct-to-consumer (DTC) division, Disney announced that it will combine its Hulu and Live TV business with FuboTV . Disney will be the majority owner of the resulting company. Per the deal, Disney will retain both brands as standalone offerings while leveraging the strengths of each platform.

This move enhances Disney’s ability to cater to a wider audience and solidifies its position in the competitive streaming market. By integrating their virtual multichannel video programming distributor (MVPD) offerings, these streaming services can deliver subscribers high-quality, flexible viewing options.

Moreover, Disney has inked a new carriage agreement with Fubo, paving the way for Fubo to launch a sports service featuring Disney’s premier networks, including ESPN. This development underscores Disney’s commitment to dominating the digital sports and entertainment space.

Streaming to Bolster Disney’s Growth

Streaming remains at the heart of Disney’s growth strategy. The company leverages its vast content library and production capabilities to accelerate growth. Disney’s ability to scale its streaming operations has been instrumental in driving profitability.

Its proprietary content pipeline enables it to periodically raise prices without significant subscriber churn. Further, the integration of ESPN content into Disney+ strengthens its bundled offerings, adding value for sports enthusiasts while driving subscriber growth.

Disney’s foray into DTC sports is another strategic pillar of its growth strategy. With ESPN Digital consistently leading the U.S. Sports category, Disney is leveraging its strong digital presence to reshape the sports entertainment landscape.

The company’s upcoming DTC ESPN service, set to launch in fall 2025, will offer innovative features such as fantasy sports, advanced statistics, and betting options. These offerings align with evolving consumer preferences for personalized and interactive sports experiences, positioning Disney well to gain share in this lucrative market.

Overall, Disney’s efforts to diversify its offerings, combining Hulu + Live TV business with Fubo and expanding into DTC sports, positions it well to capture a larger share of the streaming market.

Strength Across Business Segments

Beyond streaming, Disney’s creative engine roared back to life in 2024, with blockbusters like Inside Out 2 and Deadpool & Wolverine witnessing solid box-office success. This reinforces Disney’s ability to monetize its intellectual property (IP) across multiple channels, from merchandise sales to theme park attendance and streaming engagement.

Looking ahead, Disney’s 2025 content slate is brimming with high-potential releases that could further bolster its media segment.

Disney’s Experiences division, encompassing its theme parks and cruise lines, is another bright spot. This segment is poised for steady growth with new attractions and cruise ships in the pipeline.

The Bottom Line on Disney Stock

Disney projects high-single-digit EPS growth for fiscal 2025, with double-digit growth anticipated for 2026 and 2027. These forecasts reflect the ongoing strength of its entertainment business and the continued growth in its DTC platforms.

Despite its promising growth trajectory, some analysts do not endorse Disney stock. The stock has a “Moderate Buy” consensus rating, implying that the optimism surrounding Disney is already reflected in its current stock price.

Disney’s multi-pronged strategy, spanning streaming, sports, and its iconic theme parks, sets the stage for long-term growth. Moreover, the combination of Hulu + Live TV and Fubo represents another strategic step toward enhancing its DTC capabilities. However, analysts’ consensus rating suggests that the stock looks fully priced at current levels, implying there’s little room for significant price appreciation unless the company performs beyond expectations.

On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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The battle to gain influence in the live sports market is heating up among streaming platforms. Netflix has been pushing hard over the past few months to integrate live sports. Its Mike Tyson versus Jake Paul boxing match attracted 65 million viewers and led to 1.4 million new subscribers in the days after. The company also saw record-breaking success in broadcasting two Christmas Day National Football League games.

Walt Disney is striking back hard. On Jan. 6, the communication services company revealed that it would be purchasing a controlling stake in the sports streaming platform FuboTV . On the same day, shares of Fubo skyrocketed by an incredible 251%. They rallied another 15% in after-hours trading. Below, I’ll explain the details of the deal, as well as the important implications for both Fubo and Disney.

Breaking Down Disney and Fubo’s Massive Deal

Under the terms of the deal, Disney will split off the Hulu + Live TV part of its streaming business and combine it with Fubo to form a new company. Disney will own 70% of the resulting company. It will continue on as a publicly traded stock under the ticker symbol FUBO. The Fubo management will continue to run the company; however, Disney will appoint the majority of the board of directors. The streaming services will have a combined 6.2 million subscribers in North America. This nearly quadruples the number of Fubo subscribers, a clear reason for the skyrocketing share price.

A very important development is that the agreement settled all litigation involving Fubo with FOX , Warner Bros. Discovery , and Disney. The three giants were collaborating on a previously announced streaming service, Venu Sports. Their goal was to combine their live sports rights to create an industry juggernaut. It would have killed Fubo, which had less than 2 million subscribers on its own. Luckily for this small fish, Fubo won a preliminary injunction against Venu launching. Fubo’s lawyers successfully argued that these three giants combining to create one sports streaming app violated antitrust law. Fubo's lawyers said that had they not won the injunction, the company would have run out of cash by the first quarter of 2025.

Is Fubo Still a Buy After Trippling Its Value?

For Fubo, the deal is clearly a massive win. We may never know, but it's possible this was the result management was hoping for with the lawsuit all along. Moving forward, Fubo is also now supported by Disney’s vast financial resources, know-how, and content. Fubo will be able to create a new Sports & Broadcast service where it can utilize Disney’s plethora of broadcast networks. Fubo was in a very tough spot prior to the deal. Analysts expected revenue growth to start decelerating rapidly, and the company still hadn’t been able to achieve profitability despite generating over $1 billion in annual revenue.

Now, Fubo and Hulu can combine forces to try to reignite growth. Hulu was part of Disney’s streaming segment, which made $321 million in Q4. The combined entity is now expected to have positive cash flow going forward, per the special call the firms held. This also puts the firm in a much better spot. However, it's still very difficult to say that Fubo stock has more room to run after this massive price uptick.

Disney: Maneuvering Into an Envious Position in Live Sports

With this deal, it appears Disney was done messing around with Fubo. Fubo dropped the lawsuit, clearing the way for Venu Sports to become a reality. Disney also plans to launch its ESPN Flagship streaming service later in 2025. The combination of Venu, ESPN Flagship, and Fubo could be a fierce three-headed monster that Disney controls when it comes to live sports. Yet, shares of Disney didn’t budge on the day. The company will still be losing the Hulu + Live TV part of its business, which is generating approximately $5.3 billion in annual revenue.

Disney wouldn't have made this deal if it believed this loss was worth more than the potential gain. Venu Sports can now proceed. Given the massive power that Fox, Disney, and Warner Bros. Discovery still collectively hold over live sports, it should be a very difficult platform to compete with. The $42.99 stated price point blows Fubo’s $79.99 starting price out of the water. As a believer in live sports being increasingly important in the future of digital media, I see the deal paying off big time for Disney in the long term.