On Monday, Raymond (NS:RYMD) James confirmed a Market Perform rating for Walt Disney (NYSE:DIS) shares, a $203.78 billion entertainment giant with a GOOD Financial Health score according to InvestingPro, in light of the announcement that Disney will combine its Hulu + Live TV service with FuboTV (NYSE:NYSE:FUBO). The company's stock has shown impressive momentum, delivering a 23.4% return over the past year. The merged entity, which will be 70% owned by Disney and 30% by FuboTV, will continue to operate FUBO as a publicly traded company.
The current FuboTV management team will lead the new company, although Disney will have a majority on the board of directors. With annual revenue of $91.36 billion, Disney brings substantial financial strength to this partnership. Want deeper insights? InvestingPro offers comprehensive analysis and 8 additional key ProTips for Disney's stock.
The merger involves Hulu + Live TV's 4.6 million subscribers, not to be confused with the larger Hulu SVOD service, which has 47.4 million subscribers and is often bundled with Hulu + Live TV. The services will operate separately for the time being, with Disney distributing Hulu + Live TV through its streaming video on demand (SVOD) platforms and bundles.
The transaction is expected to take 12 to 18 months to complete, pending approval from FUBO shareholders, regulatory clearances, and other standard closing conditions. FUBO has also resolved its antitrust litigation against the Venu Sports Joint Venture, involving Disney, Fox, and Warner Bros. Discovery (NASDAQ:WBD), which had previously restricted FUBO from launching certain services.
As part of the settlement, Disney, Fox, and Warner Bros. Discovery will collectively pay FUBO $220 million, and Disney will additionally provide FUBO with a $145 million term loan due in January 2026. If the merger fails to receive regulatory approval, termination fees of $50 million to Disney and a reverse termination fee of $130 million to FUBO will apply.
Furthermore, FuboTV has announced it has reached new carriage agreements with both Disney and Fox, which may further solidify its content offerings post-merger. For detailed financial analysis and exclusive insights on Disney's market position and growth potential, access the full Pro Research Report available on InvestingPro.
In other recent news, FuboTV Inc. and The Walt Disney Company (NYSE:DIS) are set to merge Disney's Hulu + Live TV with FuboTV, creating a stronger player in the virtual Multichannel Video Programming Distributor market. Post-merger, Disney will hold a 70% stake in the combined entity, which will continue to operate under the Fubo name.
The merger is anticipated to enhance consumer choice by bringing together over 6.2 million subscribers from North America and launch a Sports & Broadcast service featuring Disney's top sports and broadcast networks.
Rosenblatt Securities recently upgraded Disney's stock price target, maintaining a Buy rating due to confidence in Disney's growth potential. Meanwhile, Jefferies initiated coverage on Disney stock with a Hold rating, highlighting strong momentum for Disney's direct-to-consumer business and an anticipated recovery in the Parks segment's operating income growth.
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