The Walt Disney Company (DIS) recently shook up the streaming sector with its surprise merger of Hulu + Live TV and FuboTV, creating a new entity that will be known as Fubo. With Disney owning a 70% stake in the combined company, investors are wondering if DIS stock is a buy after this strategic move. Let's dive into the details and analyze the potential impact on Disney's streaming strategy, subscriber growth, and competitive position.



Streaming Strategy and Subscriber Growth

The Fubo deal significantly enhances Disney's streaming strategy and subscriber growth prospects. By combining Hulu + Live TV and Fubo, Disney gains economies of scale, reducing costs and improving profitability. Hulu + Live TV had been operating at zero margins, which was a drag on Disney's expanding direct-to-consumer (DTC) margins. Offloading these financials will help Disney achieve its target of more than 10% DTC margins by 2026 (Bernstein analyst Laurent Yoon).



Moreover, the deal brings Fubo's extensive sports content to Disney, including over 55,000 sporting events annually. This complements Disney's existing sports offerings, such as ESPN and ESPN+, and helps Disney cater to a broader audience. The combined company will have 6.2 million subscribers in North America, making it the sixth-largest pay-TV distributor in the U.S. (Bernstein analyst Laurent Yoon).

Potential Synergies and Cost Savings

The Fubo deal presents several potential synergies and cost savings for Disney:

1. Economies of Scale: By combining Hulu + Live TV and Fubo, Disney can achieve economies of scale, reducing per-user costs and potentially increasing profitability.
2. Reduced Management Responsibilities: Disney will no longer have to manage Hulu + Live TV directly, as Fubo's management team will run the combined company. This allows Disney to focus on its core businesses and other streaming services like Disney+ and ESPN+.
3. Content Synergies: Fubo's extensive sports content can complement Disney's offerings, particularly ESPN+, which focuses on sports. This can lead to a more comprehensive sports streaming service, attracting a wider range of sports fans.
4. Litigation Cost Savings: The Fubo deal includes a settlement of Fubo's lawsuit against Disney, Fox, and Warner Bros. Discovery over the Venu Sports streaming venture. This settlement will save Disney the costs associated with ongoing litigation and potential damages.
5. Potential Bundling Opportunities: Disney can bundle Fubo, Hulu, and ESPN+ services, creating more attractive pricing tiers and increasing the value proposition for consumers. This can lead to increased subscriber numbers and revenue.

Competitive Position in the Streaming Market

The Fubo deal enhances Disney's competitive position in the streaming market by addressing several key challenges and opportunities:

1. Consolidation and Scale: By combining Hulu + Live TV with Fubo, Disney gains a larger subscriber base, increasing its scale and market share in the live TV streaming sector. With a combined 6.2 million subscribers in North America, the new entity becomes the sixth-largest pay-TV distributor in the U.S., ahead of competitors like YouTube TV (8 million subscribers) and Sling TV (2.3 million subscribers) (Bernstein Research, 2025).
2. Sports Content and Venu Resolution: The deal resolves Fubo's lawsuit against Venu Sports, a joint venture between Disney, Fox, and Warner Bros. Discovery. This paves the way for the launch of Venu, which will provide Disney with a dedicated sports streaming service, further strengthening its content offerings and competitive position in the sports streaming market.
3. Economies of Scale and Synergies: The combination of Hulu + Live TV and Fubo allows Disney to leverage economies of scale, reduce costs, and improve profitability. By offloading the zero-margin vMVPD business, Disney can focus on growing its more profitable direct-to-consumer (DTC) margins (Bernstein Research, 2025). Additionally, the deal opens up opportunities for programmatic advertising and carriage negotiations, further enhancing Disney's competitive position.
4. Strategic Flexibility: Keeping the proforma entity publicly traded allows Disney to explore further consolidation opportunities in the sports and linear assets space. This could include merging the new company with Venu or even ESPN, or combining it with Fox Sports' streaming strategy. This strategic flexibility positions Disney to adapt to the evolving streaming landscape and maintain a competitive edge (MoffettNathanson, 2025).
5. Consumer Choice and Bundling: The deal allows Disney to offer consumers more choice and flexibility in programming packages, catering to diverse tastes and budgets. By maintaining both Hulu + Live TV and Fubo as separate services, Disney can provide varied price points and innovative features, making its offerings more attractive to consumers compared to competitors like YouTube TV and Sling TV.

In conclusion, the Fubo deal enables Disney to consolidate its position in the live TV streaming market, strengthen its sports content offerings, leverage economies of scale, and maintain strategic flexibility. These factors combined enhance Disney's competitive position in the streaming market, making DIS stock an attractive buy for investors looking to capitalize on the company's growth potential in the streaming sector.