‘Duel to the Death’: Fubo CEO Raises Stakes in Disney-Fox-Warner Bros. Discovery Sports Streaming Legal Battle

“This is a very important process. We are sticking to our principles, to our guns,” David Gandler told analysts Friday

ESPN, Fox, Warner Bros. Discovery (Photo: Getty Images)

Fubo CEO David Gandler came out swinging against Disney, Fox and Warner Bros. Discovery on Friday, calling its legal battle over the trio’s planned sports streaming joint venture a “duel to the death.”

“We’re fighting for our customers. We’re fighting for the tens of billions of dollars that are wasted annually on consumers paying for the same content multiple times,” Gandler said when asked during its fourth quarter earnings call if it would relent given the legal costs and competitive pressure. “This is a very important process. We are sticking to our principles, to our guns.”

Chief financial officer John Janedis declined to disclose how much the sports streamer expects to incur in costs from the lawsuit. 

Fubo, which filed a lawsuit last week attempting to block the venture, has accused the trio of levying content licensing rates that are 30% to 50% higher than than those charged to other distributors and that they impose non-market penetration requirements, or the percentage of total subscribers to which a content package must be sold to or cannot exceed.

Gandler opened the earnings call by blasting the trio’s “pernicious contractual terms” and other anticompetitive practices as “borderline racketeering” that is resulting in billions of dollars of damages to its business, likening them to a “sports cartel.” He also accused Fox, Disney and Warner of forcing Fubo to license content that they don’t own, which he said “bloats our bundle and further raises prices for consumers.” 

“We have been dealing with widespread and rampant misconduct from this group and the industry at large. It has to stop,” he added. “Consumers deserve choice. They should only pay for the channels they want. They should be able to access delightful product features to enjoy the streaming experience the way they want to and they should get all of this at a fair price.”

Gandler warned that things would “remain status quo” if courts and antitrust regulators decide not to take action on its case.

“We’ll continue to have to deal with unreasonable and above market economic terms,” he said.

The comments come after Fubo shares surged as much as 16% in premarket trading Friday after the sports-focused streamer’s grew total revenue 28% year over year to $410.2 million and narrowed its net loss by 26% year over year to $71.04 million during the fourth quarter of 2023, or a loss of 48 cents per share.

Adjusted EPS improved to a loss of 17 cents per share, compared to an adjusted loss of 39 cents in the year-ago period. Analysts surveyed by Zacks Investment Research were expecting an adjusted loss of 25 cents per share on revenue of $397.37 million. 

“Even with our significant momentum in 2023, had Fubo been afforded the opportunity to compete on fair market terms in line with other distributors, such as Hulu, Comcast, Charter and DirecTV stream, we believe our results could have been even better. In fact, considering the estimated $200 million plus we were forced to pay last year to all of our media partners for content consumers don’t want as well as outside penetration rates and access fees paid, we believe Fubo may have been able to break even in 2023,” Gandler said. “And most compelling of all, we would have had the opportunity to return the savings to customers in the form of promotions and future discounts. Instead, our customers are hit with annual price hikes because they are forced to buy content they don’t want just to access sports.”

In its North America segment, total subscribers grew 12% year over year to 1.618 million and total grew 29% year over year to $402 million. Despite an overall challenged advertising market in 2023, Fubo’s ad revenue grew 15% year over year to $38.6 million during the fourth quarter of 2023 and 14% year over year to $114 million for the year.

The company’s average revenue per user also grew 15% year over year to an all-time high of $86.65. For the full year, subscription revenue came in at $370 million, up from $284.86 million in 2022, and advertising revenue of $38.99 million, compared to $33.85 million in 2022. 

In its Rest of World segment, Fubo revenue grew 18% year over year to $8.4 million, though paid subscribers fell 3% to 406,000. ARPU grew 12% year over year to $6.81. ROW includes the results of Molotov, a French live TV streaming service acquired by Fubo in December 2021. 

Looking ahead, Fubo expects to reach positive free cash flow by 2025. For full year 2024, Fubo is forecasting 1.665 million to 1.685 million subscribers and total revenue of $1.5 billion to $1.525 billion in North America and 390,000 to 410,000 subscribers and $31 million to $35 million in revenue in its Rest of World segment.

For the first quarter of 2024, it anticipates 1.415 million to 1.435 million subscribers and $365 million to $375 million in total revenue for the North America segment and 380,000 to 385,000 subscribers and $6.6 million to $8.6 million total revenue in its ROW segment. 

Fubo shares fell 4.3% during Friday’s trading session following the earnings call.

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