Sports-Centric Streaming Service Raises $75 million From TV Programmers

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Fubo TV has announced it has closed on a $75 million Series D round, increasing the total amount that the company has raised to $150 million; including a $55 million Series C round in June ’17. The sports-centric digital TV service will use the newly raised capital to expand its engineering and product teams (plans to double staff, open 2nd office by end of ’18), increase its marketing budget and acquire additional content rights. Launched in 2015, the live TV streaming platform has found a niche targeting sports fans (offering 30,000 sporting events/year); surpassing 100,000 subscribers in September 2017. While impressive, the company still lags far behind Sling TV (2.2 million) and DirecTV Now (1.2 million) in terms of market share.

Howie Long-Short: Existing shareholders (and TV programmers) 21st Century Fox (FOXA), Sky (SKYAY) and Scripps Networks Interactive (DISCA) all exercised their pro-rata rights, participating in the latest round; while AMC Networks (AMCX) invested in the company for the first time. While it appears to be an ill fit on the surface, Fubo TV isn’t the only web TV provider that TV programmers have invested in. The Walt Disney Co., pending final approval of its 21st Century Fox acquisition, controls 60% of Hulu; Comcast owns 30% and Time Warner owns 10%. It’s also worth pointing out that A&E, Discovery Communications, AMC and Viacom are invested in Philo.

Fubo TV’s business model is predicated on both recurring monthly subscription fees and ad sales. Despite having just launched “server side ad insertion” in January, ad sales represent a “low single-digit percentage” of total revenue. The company is expecting an overall revenue run rate of $100 million within 12 months.

Fan Marino: Fubo TV’s $45/mo. package, marketed as “a real sports package, for the real sports fan”, contains 85 channels; a collection of local TV networks (think: ABC, CBS, FOX), national cable networks (think: FS1, NFL Network), RSNs (think: MSG, YES, NESN) and difficult to find conference networks (think: Big 10 Network, Pac-12 Network). The bundle includes more sports channels than any other competitor, but lacks the most valuable (to a sports fan) national cable network; ESPN. Is ESPN (and ESPN2) worth the additional +/- $55/mo. required to retain your cable bundle? Probably not, but I’m not signing up for an OTT service without it.

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Author: John Wall Street

At the intersection of sports & finance.

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