Cable streaming company FuboTV (NASDAQ:FUBO) sued Walt Disney (NYSE:DIS), Warner Brothers Discovery (NASDAQ:WBD) and Fox (NASDAQ:FOX) to stop their plans for a joint sports streaming service.
Fubo’s own service advertises itself as sports-heavy, and moving games from cable to streaming would threaten its future.
FUBO stock fell 1% overnight and is expected to open this morning at $1.98 per share, a market capitalization of $573 million.
Fourth and Long
I expressed interest in FUBO back in 2021 and even bought a few shares. But I sold at a loss in 2022 and warned investors away.
The problem, as I wrote at the time, is that Fubo “controls neither its supply chain nor its sales channel.” Even then, it was unable to offer desirable games like those on Sinclair’s (NASDAQ:SBGI) Bally Regional Sports Networks. Its effort to go into sports betting was abandoned in 2022 because of the high cost of marketing. Fubo has not reported a profit since coming public in 2020.
Fubo CEO David Gandler issued a statement saying the defendants engaged in “unfair bundling.” He charged they conspired to charge Fubo higher licensing fees than other distributors. Disney’s Hulu+ competes directly with Fubo’s cable replacement offering. “This sports cartel blocked our playbook for many years and now they are effectively stealing it for themselves,” he concluded.
Industry analyst Rich Greenfield of LightShed praised the deal when it was announced, saying it will let viewers choose sports and avoid other streams. But the new offering could still be bundled with services like Hulu+.
The new bundle would cover most major sports but is short on soccer, which many young viewers like. Paramount Global (NASDAQ:PARA) controls Europe’s Champion’s League. Comcast (NASDAQ:CMCSA) has the English Premier League on its Peacock streamer. Apple (NASDAQ:AAPL) has the broadcast rights to Major League Soccer, the main U.S. league.
FUBO Stock: What Happens Next?
How far the suit gets depends on making the charge of collusion political and on Fubo continuing to pay its lawyers.
As of this writing, Dana Blankenhorn had a LONG position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
