Why Disney was willing to pay up to help launch a new sports streamer

• Disney and partners have settled with Fubo to relaunch the Venu sports streaming service.
• Venu’s launch was delayed due to an antitrust suit filed by Fubo.
• Disney will merge Hulu + Live with Fubo, creating a major digital TV service.

Remember Venu, the sports streaming service co-owned by Disney, Fox, and Warner Bros. Discovery?

Unless you spend a lot of time focused on the sports media business, you probably don’t. That’s because the service never launched: It was supposed to go live last fall, but got derailed by an antitrust suit filed by Fubo, a small streaming service.

Now it’s set to launch again — after Disney and its partners have essentially paid Fubo to drop the suit. Hearings in the case were supposed to start Monday.

Part of the payment will be cash, but there’s a more eye-popping, and confusing part of the deal: Disney is going to combine its Hulu + Live streaming service — its cable-like package of TV channels — with Fubo’s similar service into a new company, which doesn’t have a name yet.

The combined company should have around 6 million subscribers, making it the second-largest all-digital TV service after YouTubeTV, which has some 8 million subscribers. And it would become the sixth-largest pay TV service, period.

(Important note: This deal does not affect Disney’s much bigger Hulu subscription on-demand service — the one most people think about when they think of Hulu. That one had 47.4 million subscribers as of last September; Hulu + Live, which costs much more, has 4.6 million subscribers.)

We can get into a few more details in a moment. But to me, the biggest takeaway is this: It’s a reminder that Disney, which is launching its own stand-alone ESPN streaming service this fall, isn’t fully confident about that service’s prospects. That’s why it wanted to be in Venu — to be part of a bigger sports streaming service, in case a meaningful number of people wanted streaming sports from ESPN and other networks as well.

And now that Venu is (very likely) to launch this year, it means that by next fall, ESPN watchers will have a lot of options: They can pay for stand-alone ESPN; they can pay for it as part of a sports-streaming package along with other channels like ABC, TNT, and Fox; or they can pay for it as part of a very big bundle of channels, delivered by a variety of traditional and digital pay TV companies.

Onto the details: The new, unnamed Disney/Fubo joint venture will be 70% owned by Disney, which will also control its board. But Fubo’s existing management team will run the service. The deal also allows Fubo to create a new “skinny” bundle of networks including ESPN and ABC. And people who are already paying for Fubo or Hulu + Live TV via existing apps will be able to keep doing that.

Fubo also gets cash as part of the deal. Disney, Fox, and WBD will collectively pay the company $220 million, and next year Disney will lend the company $145 million to help pay down Fubo’s other debt obligations. Fubo will get a $130 million fee if the deal doesn’t get regulatory approval.

Fubo shareholders like the deal, pushing the stock up some 172% to around $4 on Monday. (Fubo had a brief pandemic-fueled run in 2021 when its shares zoomed up to $49, but since then, the market has mostly ignored it.)

So, when will Venu launch? No one is saying, but my hunch is this spring.

Remember that Venu was originally supposed to launch in the fall of 2024 when college and pro football kicked off. But Disney is already planning on launching “Flagship” — its ESPN-only service — next fall for the same football-related reasons, and it wouldn’t make a lot of sense to launch both services at the same time.

So I would expect Venu to go much earlier once the joint venture, which has been mostly mothballed for months, is ready for prime time. Some big sports dates coming up to keep in mind: The Super Bowl is February 9; college basketball’s big tournament kicks off in mid-March.