Fubo and Hulu just dropped a bomb on the TV bundle

Two major competitors in the race to replace cable bundles have suddenly become partners.

This week, Fubo and Disney announced that they will combine their respective live TV businesses. That means Fubo and Hulu + Live TV will become a single entity, of which Disney will be the majority owner.

Neither service is going away. While Fubo and Hulu are merging their respective live TV businesses, the actual services will remain separate, offered through their own respective apps. If you’re already subscribed to either Fubo or Hulu + Live TV, don’t expect any sweeping overnight changes.

Still, the two companies have already signaled that they’ll launch one—and possibly two—new sports-centric TV packages at lower prices than most live TV streaming services. That could lead to even bigger shake-ups in the pay TV landscape.

How this happened

The merger stems from a lawsuit that Fubo filed last year against Disney, Warner Bros. Discovery, and Fox, which had planned to launch their own skinny package of sports and broadcast channels. That service, called Venu Sports, would have cost $43 per month and was supposed to arrive last fall.

Fubo rightfully saw this as an existential threat. The company has always positioned itself as a sports-centric streaming provider, and in its lawsuit claimed that it’s never been able to offer the packages it’s truly wanted, without the bloat of news and entertainment channels. Fubo accused Venu’s owners of trying to monopolize a new kind of skinny TV bundle, and a federal judge agreed to block the service from launching while the lawsuit played out.

The new deal between Fubo and Disney marks the end of that lawsuit, as Fubo has settled with all involved. Fubo is getting $220 million from Venu’s backers, plus a $145 million loan from Disney, and it’ll alternatively get $130 million termination fee if regulators don’t let the deal go through.

What the companies do next is where things get really interesting.

Fubo’s “Sports & Broadcasting” package

As part of the deal, Fubo says it’s secured the rights from Disney for a new “Sports & Broadcasting” plan, which would presumably be cheaper than the bigger bundles that Fubo offers today. Jennifer Press, a Fubo spokesperson, confirmed to me that Fox is on board with the new bundle as well.

So as it stands, this package should at least include ESPN, ESPN2, ESPNU, ESPNEWS, SEC Network, ACC Network, ABC, Fox, FS1, FS2, and BTN, along with access to ESPN+.

My guess is that Fubo will now try to convince other major sports programmers to get on board, namely Warner Bros. Discovery (which owns TNT), Comcast (NBC), and Paramount+ (CBS). Based on some earlier calculations of mine, this kind of package would be at least $10-per-month cheaper than the current crop of live TV streaming services.

What about Venu?

The announcement from Fubo and Disney says nothing about the future of Venu Sports. But with the legal hurdles cleared, it’s possible that the service could re-emerge.

The runway isn’t entirely clear. As the New York Times notes, the Justice Department previously filed a brief in support of Fubo’s lawsuit, and the consumer advocacy group Public Knowledge is arguing that the deal between Fubo and Disney is bad for competition.

But if Venu revives its launch plans, it would offer both Disney’s and Fox’s lineup of sports and broadcast channels along with TNT, TBS, and TruTV from Warner. It would not be a complete solution to all your sports headaches, but it might be a good fit for some cord cutters and would be a welcome alternative to whatever Fubo comes up with.

Let more sports bundles blossom

The bigger question is how the rest of the TV world will respond.

DirecTV already plans to launch its own sports-centric bundle, alongside separate genre-based packages for entertainment and kids/family programming. That plan is the result of DirecTV’s own hard-fought carriage dispute with Disney last year.

From there, I’m guessing YouTube TV and Dish (which also operates Sling TV) won’t take kindly to being stuck with bloated bundles while their competitors are allowed to offer just the most valuable sports and broadcast programming. We can expect them to push for their own skinnier sports-centric bundles in response.

The result will be a somewhat more confusing live TV streaming landscape, with even more packages to choose from, but also more potential to save money if you’re willing to be choosy. That at least seems better than the status quo.

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