Disney stock gains after agreement to merge Hulu with Fubo

Disney has agreed to combine Hulu and other streaming assets with Fubo.
Fubo is an exclusively sports-oriented streamer that will manage the new entity.
Disney will own 70% of the combined streaming company.
Fubo has agreed to drop its lawsuit against ESPN's Venu Sports platform.

Clay Webster FXStreet

Disney (DIS) stock added 1.3% early on Monday after the media giant announced a deal to merge its Hulu + Live TV business with Fubo’s (FUBO) sports streaming service. Disney will own a 70% controlling share of the combination, which will remain under the Fubo brand and stock.

Disney stock rose 1.3% on the news, while Fubo saw its share price surge 240% to $4.90 per share by the afternoon. DIS stock trades near $112 at the time of writing.

Wall Street is optimistic on Monday after The Washington Post reported that Trump advisors are attempting to restrict which sectors are subject to Trump’s worldwide tariff policy that may be implemented as soon as later this month following his inauguration on January 20.

The Dow Jones Industrial Average (DJIA), which includes Disney stock, has risen 0.15% at the time of writing, while the NASDAQ zooms up more than 1%.

Disney stock news

Fubo runs a sports-focused streaming platform that is unique in that it provides users with access to nearly all major sports broadcasts rather than the current segmented industry norm, wherein users have to subscribe to multiple streaming services in order to watch all the matches for a particular league.

Sports is the most expensive tv programming, so Fubo offerings cost between $33 and $110 a month with the average bundle costing above $80. This starkly contrasts with Hulu, which runs between $10 and $19 per month and offers sitcoms and other entertainment programming.

The merged companies will have more than 6.2 million subscribers worldwide and immediately be cash-flow positive, according to Disney, something that has been difficult for Fubo to achieve on its own. All current offerings under Hulu + Live TV and Fubo will continue, but Fubo will produce a new tier of content that includes Disney assets like ABC, ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, as well as ESPN+.

Current Fubo management will run the combined entity. As part of the agreement, Fubo has agreed to settle its litigation against ESPN, FOX and Warner Bros. Discovery in regard to their Venu Sports platform. In connection with that lawsuit, Disney, FOX and Warner Bros. Discovery will make a $220 million cash payment upon completion of the merger.

Disney has agreed to loan Fubo $145 million in 2026 and will pay Fubo $130 million if the merger fails to receive regulatory approval.

Unrelated, but also quite positive for Disney shareholders, “Mufasa: The Lion King” led the first weekend of 2025’s box office receipts. The film, a prequel to 1994’s Lion King, brought in $23.8 million in receipts.

Disney stock forecast

Disney stock has retreated since reach resistance near $118 at the start of December. Now following a period of consolidation above $110, the stock looks poised for a run at the March/April 2024 resistance point near $123.50.

The 13-week Simple Moving Average (SMA) has separated itself from its 26 and 52-week counterparts, demonstrating that an uptrend is still in motion. The Relative Strength Index (RSI) is also below overbought levels, so the current price structure would seem to be a decent entry point.

DIS daily stock chart

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Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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