Disney started off 2025 with a bang, unveiling on Monday a surprise merger of its multichannel video streaming service Hulu + Live TV with competitor FuboTV, forming a combined company that will continue to be publicly traded under the Fubo name, but with the Hollywood giant controlling 70 percent and a majority of the board.
Fubo will drop its lawsuit against Venu Sports, the sports streaming joint venture of Disney, Fox Corp., and Warner Bros. Discovery, as part of the transaction. And Fubo CEO and co-founder David Gandler will run the combined entity.
While experts expect more sector M&A ahead, the Fubo deal took most Wall Street experts by surprise. What is no surprise though is that analysts have chimed in on what the merger, expected to close in about 12-18 months, means for the space of virtual multichannel video programming distributors (vMVPDs) and beyond. In that sector, YouTube TV reported, a year ago, 8 million subscribers, compared with Hulu + Live TV’s 4.6 million, and Fubo’s 1.6 million subscribers, for a combined 6.2 million subs, in North America, for the merged firm.
“Frankly, we didn’t see this one coming,” wrote Bernstein analyst Laurent Yoon in a report. “We didn’t expect Disney (or anyone) to effectively acquire a troubled vMVPD asset with, at best, an uncertain future. What we missed was Disney’s willingness to spin off its own vMVPD business – which essentially operates with zero margins (dilutive to expanding direct-to-consumer (DTC) margins going forward) – and its need to create additional price tiers for sports fans (Venu and perhaps through Fubo) to mitigate the downside from [the ongoing] pay-TV decline.”
The result should be a boost to the profitability of Disney’s remaining streaming business. “It is generally believed that Hulu + Live TV operates at zero margins, which is a drag on the rapidly expanding DTC (Disney+ and Hulu) margins on a consolidated basis,” Yoon explained. “As Disney aims to deliver more than 10 percent DTC margins in 2026, offloading vMVPD financials (around $4.4 billion in last 12 months revenue) would certainly help.”
The analyst also noted that the launch of Venu, “and potentially new packages from Fubo, appears to be an important strategic lever to cast a wider net and catch all potential subscribers of ESPN across various price tiers.” But he also emphasized: “We remain cautious about the potential synergies discussed in the investor deck given the structural challenges of the pay-TV business model.”
Macquarie media and tech analyst Tim Nollen, who has a “Neutral” rating on Disney, wrote in his latest research report, “Financially speaking, this combination with Fubo doesn’t move the needle much, but strategically we think it’s a good move to help consolidate the distribution business further, which could open up more opportunities in carriage negotiations as well as in developing more programmatic advertising.” Nollen also noted, “For Fubo, it’s a neat resolution to the key issues that have weighed on it for some time now – combining with Disney provides it much more scale, and resolves the Venu dispute. New Fubo should therefore hasten the growth of streaming sports, providing it the goal it has long sought – to be a sports focused DTC service.”
MoffettNathanson analysts Robert Fishman and Michael Nathanson entitled their report “The Fubo FUBAR,” asking: “Why does Disney want to add another streaming platform to its already long and growing list of consumer streaming offerings? Keeping the Fubo brand alive (along with the public equity), plus the pending ESPN Flagship launch and the now likely upcoming launch of Venu, in addition to Hulu + Live TV, ESPN+, standalone Hulu SVOD, and of course Disney+ (which now includes Hulu and ESPN content) only further confuses the long-term streaming strategy for Disney investors.”
But they also noted that this could also simply end up being the first step in more dealmaking in the sports space. “Maybe beyond the Venu legal settlement, we will be able to look back on this transaction as a necessary step for Disney to help actually simplify its sports streaming strategy,” the experts wrote. “Moreover, we are intrigued by the possibilities implied by the decision to keep the proforma entity publicly traded. Perhaps the new company will serve as a vessel for further consolidation of sports and linear assets, including those owned by Disney. Could this entity one day merge with Venu? What if we think even bigger like combining ESPN? And what about the future of Fox Sports’ streaming strategy? This is certainly getting far into the realm of speculation, but the deal certainly has an air of being merely step one of a larger plan.”
Morgan Stanley analyst Benjamin Swinburne focused on the merger’s implications for Disney and the broader TV industry. “The total combined company will have 6.2 million subs in North America, making it the sixth-largest pay-TV distributor in the U.S., and 6.5 million globally, including France and Spain, with $6 billion in pro-forma revenue,” he highlighted. For Disney, “the combined company takes away the responsibility of managing Hulu + Live TV, while incorporating more revenue – at a low earnings profile compared with Disney overall, but perhaps better than Hulu Live TV stand-alone.”
For the Hollywood powerhouse, the Fubo deal provides new opportunities, he also argued. “It now gives Disney three options for streaming sports: Fubo will create a new Disney sports and broadcasting package, and Disney along with Fox and Warner Bros. Discovery have now settled with Fubo on the Venu sports streaming service that Fubo had sued to prevent… . These are in addition to the ESPN Flagship DTC service due to launch in August.”
What does that mean? “In a TV landscape where streaming is rapidly replacing pay TV, and more live sporting events are appearing on streaming services like Netflix, Disney is ensuring it has its bases covered with broader reach for ESPN in the future,” Swinburne concluded. “The Venu settlement is also positive for Warner Bros. Discovery as it should extend its sports content streaming on Max, and for Fox, which does not currently have a DTC option.”
Jason Cuomo, analyst at debt ratings firm Moody’s, called the Disney-Fubo deal “a positive development” for Disney, Fox, and Warner Bros. Discovery and their streaming strategy. “While the combined service will have only 6.2 million North American subscribers, the real benefit is Fubo’s concurrent agreement to drop all litigation against the larger streamers’ planned joint venture Venu … which had been stalled by Fubo’s complaints about its competitive threats,” he explained. “In return, the Venu partners will pay Fubo $220 million and a $145 million loan from Disney. We believe this is a relatively small concession to help facilitate the Venu launch, which has the potential to create a new package of substantial sports streaming programming for avid sports fans.”
Wedbush analyst Michael Pachter, meanwhile, focused on what the deal will mean for Fubo and its stock. “Fubo’s combination with Hulu+ Live TV should result in a dominant player in over the top broadcast,” he argued. “We firmly believe that the new Fubo can add 500,000-1 million customers per year for the next four years, which is likely to drive revenue growth of $500 million or more each year. Thus, we think it is fair to look at Fubo as a ‘growth’ company and assign a valuation at the higher end” of his range. His new price target is $6.40, up from $3.00.
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