Fubo sued Disney, then Disney bought Fubo

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Fubo sued Disney, then Disney bought Fubo.

For several months, the sports streaming service Fubo has been successfully preventing the launch of a competitor jointly owned by Disney, Fox and Warner Bros. Discovery. Today this struggle is over: Goliath has redeemed David. Fubo and Disney have announced a deal under which the Mickey Mouse company will become the majority owner of its sports streaming competitor.

Under the terms of the deal, Hulu+Live TV, a Disney-owned cable TV service, will be merged with Fubo to create a new company led by Fubo co-founder and current CEO David Gundler. Hulu + Live TV and Fubo will continue to operate as separate services. Fubo will also receive a new deal with Disney that will allow it to launch a subscription service that will stream Disney’s vast collection of sports channels, including ABC, ESPN, ESPN2, ESPNU, ESPNEWS, ESPN+, SEC Network, and ACC Network.

What does Disney get out of all this? Well, it can move forward with plans to launch its own sports streaming service.

Earlier this year, the company announced plans to partner with Fox and Warner Bros. Discovery to launch a streaming service called Venu Sports, which will combine the companies’ collective rights to sports broadcasts on one platform. In theory, the platform should have offered subscribers access to most national broadcasts of NBA, NHL, and MLB games, as well as college football and basketball.

But Fubo managed to interfere with this plan. Back in April, it filed an antitrust lawsuit against the companies involved in Venu Sports and launched a public advocacy campaign asking consumers to contact their representatives and urging them to prevent the launch of the joint sports streamer. For Fubo, this situation was essentially a matter of life and death; it (probably correctly) assumed that it would not be able to compete with a platform owned by the very companies with which it has to negotiate streaming rights.

Now this confrontation is over. Fubo has agreed to settle all legal disputes related to Venu Sports as part of a new agreement with Disney. The company also received a considerable reward for this. Disney, Fox, and Warner Bros. Discovery have agreed to pay Fubo $220 million in exchange for the termination of the lawsuit. Disney also provides its new partner with a $145 million loan for its operations. And if the deal fails for some reason, Fubo will pay $130 million to terminate the contract. As it turned out, the money speaks for itself.

The chances that the deal will go through are quite high, as it will happen under the Trump administration, and the newly elected president is already showing a more friendly stance when it comes to M&A. Still, you never know when he will try to block something out of personal spite rather than principle. He reportedly tried to prevent AT&T from acquiring Time Warner in part because of his personal dislike of CNN.

Although the fate of Venu Sports is still unknown, the biggest hurdle – Fubo – is behind it, and the second biggest hurdle – the Department of Justice, which is in charge of antitrust laws – is on its way. It all depends on Disney.

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