Unanticipated Champion Emerges from the Chaotic Venezuelan Sports Scandal
Unanticipated Champion Emerges from the Chaotic Venezuelan Sports Scandal
The scrapped sports streaming service, Venu, had the potential to shake up the world, but alas, it won't be rolling out. The collaboration between Disney, Fox, and Warner Bros. Discovery to combine their sports content into a single platform was a bold move, setting fans back $43 a month. However, Venu sadly met its demise before its debut.
The market's response to this unexpected news was intriguing, to say the least. Disney took a minor hit, dropping 1%. Fox followed suit with a 1.6% decrease, slightly worse than the S&P 500's 1.5% slip. Warner Bros. Discovery suffered the most, shedding a substantial 3.6% of its value.
Despite the setback, Disney managed to outperform the market – a surprising twist given the circumstances. It wasn't just Venu that was dealt a fatal blow; the media giant was advocating for it. But don't be surprised if this initial price action foreshadows Disney as the biggest beneficiary of Venu's untimely demise.
Shifting the goalposts
Venu was packed with appealing features. Disney's impressive 80% stake in ESPN, boasting ESPN+ and numerous sports channels, was its star attraction. Disney has rich deals with the SEC and ACC conferences, which come with their dedicated networks.
Fox brought FS1 and FS2 to the table, with rights to various soccer, baseball, and IndyCar content. It's also a major college player, including its deal with the Big Ten conference that produced a standalone network.
Warner Bros. Discovery didn't walk in empty-handed. Its TNT, TBS, and truTV channels offered appealing sports programming, although they’re primarily known for reruns and classic films.
However, there's one stock that fared even worse than its partners.
Venu's downfall unveils the victor
The cancellation of Venu led to an initial surge in FuboTV's stock price, the primary critic of this now-dead partnership. Opening 7% higher on the day, FuboTV traded as much as 12% higher early on. But alas, the stock tumbled back to earth and closed near 5% lower.
But Disney's not counting losses just yet. Four days before Venu's untimely end, Disney struck a deal for a 70% stake in FuboTV. In exchange for dropping its lawsuit against Venu, FuboTV will receive a $220 million cash injection and merge its platform with Disney's Hulu+ Live TV service, instantly achieving profitability. With 6.2 million subscribers, the new combination is on the brink of surpassing niche leader YouTube TV, which boasts over 8 million accounts.
Live TV streaming platforms are poised to thrive in this Venu-less world. FuboTV is in a prime position to capitalize on this opportunity, now that Disney has a majority stake in its transformative platform. The combined offering of Hulu's on-demand streaming service and FuboTV's live TV offerings gives Disney a unique edge, while its various bundle packages serve as a funnel into FuboTV's growth.
Finally, let's switch channels to ESPN+. While Venu may have seemed like a good idea a year ago, the streaming landscape is rapidly evolving. Major players like Netflix, Amazon Prime, and Alphabet have secured valuable licensing rights, with Netflix even partnering with the NFL to showcase live games. In a market where rights are split across various premium services, a standalone platform like Venu is no longer necessary. It might have been the popular choice once, but now it's a relic of the past. And given its parent company's clout, ESPN+ is a force to be reckoned with.
Adieu, Venu. While Disney may have faced a setback, it's still a force to be reckoned with.
In light of Venu's cancellation, investors showed interest in FuboTV, causing its stock to surge initially. However, the momentum fizzled out, and the stock closed near 5% lower on the day.
Recognizing the potential in FuboTV, Disney secured a 70% stake in the platform four days before Venu's demise. This partnership will provide FuboTV with a much-needed cash injection, merge its platform with Hulu+ Live TV, and ensure profitability.