DEFA14A: FuboTV to Merge with Hulu's Live TV Business in Landmark Deal

FuboTV and Hulu have entered into a business combination agreement to merge Hulu's Live TV business with FuboTV, creating a new entity jointly owned by Hulu (70%) and Fubo (30%).

Summary

• FuboTV and Hulu have agreed to combine Hulu's Live TV business with FuboTV in a deal structured as an Up-C reorganization.
• Hulu will contribute assets related to negotiating and administering carriage agreements for its Hulu + Live TV service to a newly formed entity (Newco).
• FuboTV will contribute its business to Newco, excluding its equity interests in Molotov SAS under certain circumstances.
• After the contribution, Hulu will hold a 70% economic interest in Newco, and FuboTV will hold a 30% economic interest.
• Hulu will receive a newly created class of FuboTV common stock (Class B) representing 70% of the voting interest in FuboTV.
• The deal includes a $145 million debt commitment from a Disney affiliate to FuboTV, contingent on customary conditions but not on the business combination.
• The agreement includes termination fees: FuboTV may be required to pay Hulu $50 million under certain circumstances, while Hulu may be required to pay FuboTV $130 million under other specified conditions.
• The transaction is subject to shareholder approval, regulatory approvals, and other customary closing conditions, with an outside date of April 6, 2026, which may be extended to October 6, 2026 under certain conditions.

Sentiment

Score: 7

Explanation: The sentiment is cautiously optimistic. The deal provides FuboTV with access to valuable assets and financial resources, but it also involves a loss of control and potential integration challenges. The settlement of the lawsuit is a positive development.

Positives

• FuboTV gains access to Hulu's carriage agreements and related assets, potentially improving its content offerings.
• The $145 million debt commitment provides FuboTV with additional financial flexibility.
• FuboTV retains a 30% economic interest in Newco and will be the sole managing member.
• Settlement of the litigation between FuboTV and Disney/Hulu.

Negatives

• Hulu gains 70% voting control of FuboTV, potentially reducing FuboTV's autonomy.
• FuboTV shareholders will be diluted by the issuance of Class B common stock to Hulu.
• The deal is complex and subject to numerous closing conditions, creating uncertainty about its completion.

Risks

• The transaction may not receive shareholder or regulatory approval.
• Integration of Hulu's Live TV business with FuboTV may be challenging.
• The expected synergies and operating efficiencies may not be achieved.
• Legal proceedings could arise following the announcement of the transaction.
• The loss of key FuboTV personnel to Hulu.

Future Outlook

The document contains forward-looking statements regarding the completion of the transaction, its impacts and benefits, and the expected leadership team and board of directors following the closing. These statements are subject to risks and uncertainties.

Management Comments

• The document does not contain direct quotes from management, but it implies that the FuboTV board believes the merger is in the best interests of the company and its shareholders.

Industry Context

This announcement reflects the ongoing consolidation and competition in the streaming and live TV industries, as companies seek to gain scale and improve their content offerings. It is a direct response to the lawsuit filed by FuboTV against Disney and other media companies.

Comparison to Industry Standards

• The deal structure, involving an Up-C reorganization and joint ownership, is similar to other transactions in the media and technology industries.
• The termination fees are within the typical range for deals of this size.
• The governance arrangements, with Hulu gaining voting control, are common in mergers where one company is acquiring a significant stake in another.
• Comparable companies include other streaming services like Sling TV, YouTube TV, and DirecTV Stream, which are all competing for subscribers in the live TV space.

Corporate Governance

Legal Proceedings

• The agreement settles the action captioned fuboTV Inc. v. The Walt Disney Co., No. 24-cv-1363-MMG (S.D.N.Y. 2024).

Related Party Transactions

• The transaction involves related-party transactions between FuboTV and Hulu/Disney, including the contribution of assets, issuance of stock, and commercial agreements.

Stakeholder Impact

• Shareholders: Potential dilution of ownership and uncertainty about the future direction of the company.
• Employees: Potential changes in roles and responsibilities due to the integration of the two businesses.
• Customers: Potential improvements in content offerings and user experience.
• Suppliers: Potential changes in relationships and contract terms.
• Creditors: Potential impact on creditworthiness and debt obligations.

Next Steps

• FuboTV will prepare and file a proxy statement with the SEC.
• FuboTV will hold a shareholder meeting to obtain approval for the transaction.
• The parties will seek regulatory approvals.
• The parties will finalize and enter into ancillary agreements.
• The parties will complete the Hulu Reorganization and Fubo Reorganization.
• The transaction will close upon satisfaction of all closing conditions.

Key Dates

Keywords

FuboTV, Hulu, Merger, Business Combination, Live TV, Streaming, Carriage Agreements, Newco, Disney, Up-C Reorganization