Disney is simplifying its TV picture by merging its Hulu Live TV bundle with FuboTV, a rival streaming service. The deal will help Disney achieve its target of generating an operating margin of at least 10% by next year, but it also raises questions about the company’s confusing and redundant sports-related services.
The transaction will make Disney the owner of 70% of the enlarged venture, which will combine FuboTV’s 1.6 million customers with Hulu Live’s 4.6 million to bring closer to the video subscriber base of major competitors like Comcast.
However, analysts say that the business model remains quixotic, with subscription fees leading to increased programming costs. The deal also leaves Disney’s picture frustratingly fuzzy, as it tries to navigate multiple streaming services and sports-related ventures.
The move is part of a larger strategy by Disney to expand its streaming presence, including a new joint venture with Warner Bros Discovery and Fox to offer live programming from the three media giants. Meanwhile, Fubo has dropped a lawsuit against this joint venture after receiving a cash settlement in connection with the Hulu deal.
Despite the promise of $120 million in annual synergies and at least $7.5 billion of revenue by 2028, there’s no guarantee that the two struggling TV services will become stronger together. The deal marks another step for Disney CEO Bob Iger to address his long-term goal of improving the company’s operating margins.
The Fubo deal also highlights the challenges facing Disney in managing its linear network ABC and its stable of cable channels, including FXX, which have seen a decline in operating profit.
Source: https://www.reuters.com/breakingviews/disney-deal-barely-clarifies-its-tv-picture-2025-01-07