Disney's streaming strategy gets more confusing as Venu Sports venture is axed

Dow Jones01-10

MW Disney's streaming strategy gets more confusing as Venu Sports venture is axed

By Emily Bary

Analysts are split on whether Disney should move forward with plans to combine Hulu + Live TV and Fubo, following the cancellation of its sports joint venture with Fox and WBD

Walt Disney Co.'s streaming strategy is all the more complicated after an action-packed week that began with plans to combine FuboTV Inc. with its Hulu + Live TV product and ended with a shuttering of the Venu Sports joint venture.

Disney $(DIS)$ already has a number of streaming brands under its umbrella - think Disney+, ESPN+, and Hulu - and now it intends to add Fubo $(FUBO)$ to the mix. Meanwhile, the company, along with partners Fox Corp. $(FOXA)$ $(FOX)$ and Warner Bros. Discovery Inc. (WBD), no longer will be going through with plans to pour content into Venu, which had been announced last year as a sports-focused bundle, albeit without a price tag or launch date.

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Read: The FuboTV-Hulu deal was good for investors. There's a silver lining for viewers too.

Admittedly, even though the Venu partners reached a settlement with Fubo in conjunction with the Hulu announcement, the broader legal brouhaha over Venu was set to live on through opposition from DirecTV and EchostarCorp.'s $(SATS)$ Dish Network.

MoffettNathanson analyst Robert Fishman thinks Disney has enough in its arsenal that it could have proceeded with a sports-focused skinny bundle on its own, without contemplating Venu in the first place or inking the merger agreement with Fubo earlier this week. He's still not sure about the value of adding Fubo to the mix, noting that the company can still walk away.

"The best answer we can come up with today that would cap off this week is for Disney to exit and pretend the Fubo deal never happened," he wrote. "Then at least investors can start to focus on a more cohesive sports and streaming strategy."

Abandoning the Fubo plan would mean paying a $130 million termination fee. Fubo shares lost 4.5% on Friday.

Wedbush analyst Alicia Reese seemed to agree that there wasn't much in it for Disney to move forward with Venu, since WBD's loss of National Basketball Association rights meant that Venu "would have been mostly ESPN, which Disney can offer standalone."

"Pushback from major satellite TV providers and the loss of major rights likely provided too much of a headache for the three companies to continue fighting for the launch of the service," Reese continued.

She said it "remains to be seen" whether the latest on Venu disrupts the Hulu-Fubo plans, but she also saw merit for Disney in maintaining that arrangement.

"Disney has incentive to hand over live TV to Fubo to manage so they can focus on the rest of the streaming business," she wrote. If the merger goes through, Disney would own 70% of Fubo, and Fubo Chief Executive David Gandler would lead the combined service.

Read on: Here's what's worth streaming on Netflix, Max, Disney+ and more in January 2025

-Emily Bary

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January 10, 2025 17:26 ET (22:26 GMT)

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