fuboTV Inc. (FUBO) Earnings Call Transcript & Summary

My favorite topic.

So as I alluded to earlier, I think, Fubo started as a soccer-oriented service in 2015, then you wanted to broad it out to add other sports, but it couldn't happen because of the Pay TV industry's long-time bundling practices, where you have to add other networks in order to get to this one, in case of Disney networks in order to get ESPN suite, the Fox channels to get at the broadcast network, Fox Sports 1 and Fox Sports 2 or whether it's Cartoon Network or Cartoon Classic to gain access to TNT and TBS. If you could talk about the impact of the bundling on Fubo's business and its monthly subscription [indiscernible].

The JV is just one example of how we believe these companies have blocked and stolen our playbook. As we said, we started this back in 2015, and we've been blocked every turn from being able to offer product. We thought that would resonate with consumers. Obviously, these 3 large media companies, which control call it 65% or more of broadcast programs [indiscernible] excited to launch a similar service. And we filed an antitrust lawsuit against Venu Sports, but I think that's just one piece of it. The judge, I believe, agreed with us [indiscernible]. And I believe she said we would be successful in the merits of our claim, which is why she did grant the injunction. We feel pretty good about our position, but there's a much deeper problem here. I would say that is historical, such that sports customers have been forced to pay for unwanted entertainment programming. But at the same time, over the years, entertainment customers have been subsidizing all the sports programming. And it just isn't fair to consumers, and I'm happy that finally this has come to light, and we were the ones that have to bring this up because we're again at the forefront of this. And we've been attempting to really disrupt the pay-TV ecosystem now for 9 years. This is a very important move. But as I said, there's a deeper issues here that have really impacted consumer control, have negatively impacted consumer discretionary income. The cost of these things have been rising for decades. And it simply isn't fair. And I think it's time that we shine a light on it as distributors.

Get back to Venu a little here. So they announced in February, were you hearing rumblings about this before and you guys, I think filed your lawsuit within maybe 10, 14 days after they announced their plans?

Yes, we heard about it just like everyone else, and I think we were equally surprised [indiscernible]. The leagues were also surprised. I think the NFL came out...

Yes, that's right. Yes. They said they were caught unaware. That's right.

In my view, I subjective you, I don't think it was an honest way of drip feeding information out to the market. All of this, obviously, was very much planned. All 3 CEOs came out to market during earnings season to announce this. And again, I think it's disingenuous to really talk about a product that's good for consumers. When we all know, without any competition in the marketplace, prices ultimately go up. There's no reason why consumers shouldn't believe that this would just be a very short-term proposition after that, they will not be incentivized to keep prices out or improve their products.

So this, again, it's been sidelined for now. I think they're mounting another appeal to maybe to get another hearing to get Venu launch, the main trial is set for next year sometime? Or is there a date in mind?

I believe it's October 6. But if not, October 6, I believe it's the first week or early days of October. So I think we're waiting for the appellate court to rule, I think, that's going to happen before the end of the year. I think [indiscernible] to that, I think we'll begin to focus on the trial. So it's not an easy thing, but we're fighting for choice. And again, our goal is to make sure that to the judge, these are points and our case will be heard.

So do you think you guys will prevail on this?

I hope we prevail. But as I read the decision that she put forth, a 70-page document she basically says the only reason she granted the preliminary injunction is because she felt we would be successful in the merits. Otherwise, if she felt -- she -- we wouldn't have been successful in the merits. I don't think she would have issued that. That gives me comfort to set, we're in a decent position. Obviously, things can change. We still have to go through a significant period of discovery, both sides to the defendants and plaintiff and we'll be looking forward to putting our case in front of the judge again.

All right. Let's shift gears a little bit towards the local side. Obviously the regional sports network business, it's being challenged in many different ways. Fubo, David, along with, I think, DIRECTV are the only distributors that actually are committed to carrying of the RSNs or most of the RSNs. So many different things have happened. The songs, the Jazz, the Utah Hockey Club, Panthers, Pelicans, Dallas, Trailblazers, all others have inked deals of various kind with broadcast networks and/or broadcast station owners and/or with streaming companies. How do you guys make that work? There are just so many. How do you guys stand that way in terms of distributing all of the newcomers or the new kinds of businesses as they are.

Yes. One is you have to stay abreast of everything going on daily. You can't look at this stuff weekly because as you said, there's so many changes going on and teams taking their rights back and attempting to either grow their audience or grow their revenue or both. And so we believe if I'm not mistaken, carry over 35 regional sports networks today, plus direct deals. I think one of the first deals, if I'm not mistaken, was the San Diego Padres that were dropped -- I think there was the first team that was dropped by Bally. And quickly, we were able to work with Major League Baseball to get that, I don't want to call it an [indiscernible], but that team's games up and running in San Diego without missing a game. We're very focused on ensuring that we continue to provide our consumers with all the programming that they're looking for. Obviously, local sports is very important. Some of the most avid fans are local sports fans, and that makes sense because they want to get their 80-plus games that they can watch on their local station. I say station because some of these deals have gone over -- I'll say they're either regional sports network, local station or some kind of direct-to-consumer service. But I think what we've learned and what we know being in the business for 10 years, this is not an easy thing to do to run a direct-to-consumer service in a small DMA, the economics are extremely challenged. And so we're going to do our best to continue to work with these teams and offer them opportunities to drive revenue and viewership.

Again, in the sense that you mentioned the Padres the Diamondbacks and the Rockies are also for lack of better terms, under Major League baseball purview and working with the local distributors and I guess with you guys. Coming out of the Diamond bankruptcy last week, I guess, Diamond is looking to drop all of its baseball relationships minus the Braves. Are you guys in a position to do that? Can you cover all those teams? Do you want to cover all those teams? Your relationship with baseball because obviously, when you get into the local programming, that's the most inventory of all the games.

Yes. Look, of course, we want to carry all the teams. Again, our job is to aggregate as much programming as we can. We're also a leading partner, I would say, in Major League Baseball. In terms of coverage, we have local team networks. We deliver a Major League Baseball Network, MLBN. We deliver Strike Zone, MLB.TV and obviously, baseball through all the national nets like ESPN and Fox. We've been a long-time partner of the league, and we'd like to continue to be that partner. And every time there is some kind of issue or they need assistance immediately, I think we're very quick to react to in the Padres case to be a good partner for them. So we enjoy working with baseball and we're very happy about the coverage and the improvement in some of the league rules, which have led to improving viewership numbers, better engagement. So -- we're excited to continue partner with MLB.

In a way of wrapping up you, David, I've been covering this for many moons. You're obviously in the middle of it. Those sports landscape is ever evolving, changing, exciting? What's an overall assessment of where things stand?

Yes. Look, I think that it's very quickly evolving. I think that the media companies over the last 15 years have I would say, had a negative impact on the industry. It's not that people don't like cable or they don't like 1 bill and having all their programming in one place, given everything that's been happening has become very difficult to monetize programming. And as you know, the Pay-TV ecosystem has been an extremely profitable business for all participants, for the distributors for all the network groups for the sports leagues for decades, and the consumer basically enjoyed it. If they wanted to watch a sporting event and they turned on Fox and it wasn't there, they would switch it to ESPN without any frustration. Now you're dealing with a lot of fragmentation. And because of that fragmentation, even with college football this year, I think probably have not watched as much college football early on only because they're still confused as to what games are where and which leagues. I think that has had some impact on viewership at least in the first month. But all in, I would say that you're going to see a lot of this evolution going forward. But my belief is, and I said this back in 2020, that we're going from bundling to unbundling to rebundling, they have been saying that for many years since 2020. My sense is the best user experience is going to be one, where people can get niche sports, with the top premiums or broadcast force everything in one place because it's just easier, you have better personalization, better use of targeting, better use of artificial intelligence, everything to really improve that user experience. My bet is that ultimately, we'll be in a place for distribution still remains a core way of getting content to consumers.

All right. That concludes this episode of Media Talk. I wanted to thank our guests, David Gandler, for bringing us up to speed on Fubo's progress. Thank you, David. I appreciate it.

Yes. Thank you so much.

This is Mike Reynolds and thanks to all of you for listening. We'll catch up soon on the next edition of Media Talk.