US-based streaming service FuboTV has closed an initial public offering (IPO) on the New York Stock Exchange, ticker (FUBO) at US$183 million. FuboTV was launched in 2015. It was slightly ahead of the cord-cutting curve we see today. There has been a lot of investment in this sector of the media business.
The successes of Hulu, Sling, and Viacom acquisition of PlutoTV seems to have been a catalyst to raise additional capital in the public markets. With strong organic growth and a merger with Facebank Group in April 2020, Credit Suisse provided an additional infusion of cash that amounted to $46 million in July of this year.
FuboTV is a vMVPD catering to the sports enthusiast. A virtual MVPD (vMVPD) is a service that provides multiple television channels through the internet across desktop, mobile app,` or connected TV app. It does not supply its own data transport infrastructure like cable, satellite, etc. Revenues are generated by subscription and advertising.
A vMPVD contains fewer channels than a traditional cable or satellite offering. However, with the onset of successful IPOs and large dollar acquisitions, they are giving traditional MSOs (aka. Cable companies) a run for their money. This is causing much-needed pricing competition for the consumer. We should note, many of the M&A dollars come from large media companies. This aspect [nearly] defeats the purpose of ‘cord-cutting’ and the vMVPD. Time will tell.
Back to the FuboTV IPO. The company began to offer more Entertainment and News type programming in the second half of the year, due to Covid-19’s impact on live sporting events. In fact, they signed a deal with Disney in the third quarter. The deal includes News, Entertainment, and highly coveted ESPN. ESPN reinforces FuboTV’s original sports-themed offering.
FuboTV will offer 18.3 million shares at a price of $10 per share. These numbers are larger than the $157.4 million target previously expected. The numbers are gross and may be adjusted after underwriting, commissions and expenses are calculated.
The original expectations were to offer approximately 15 million shares at a price ranging from $9 to $11 per share. The previous structure of the offering also gave investors the option to buy 2.25 million shares at the IPO price. There would be a 30 day window for these transactions. An excerpt from FuboTV’s SEC filing is below.
| Common stock offered by us | 18,300,000 shares |
| Common stock offered by us pursuant to the underwriters’ option to purchase additional shares | 2,745,000 shares |
| Total shares of our common stock to be outstanding after this offering | 65,507,209 shares (or 68,252,209 if the underwriters exercise their option to purchase additional shares from us in full) |
| Total shares of Series AA Preferred | 31,556,906 shares of Series AA |
| Stock to be outstanding after this offering, or total shares of common stock to be outstanding from the conversion of Series AA Preferred Stock assuming conversion of all Series AA Preferred Stock | Preferred Stock (or 63,113,812 shares of common stock on an as-converted basis) |
| Voting power held by holders of our common stock after giving effect to this offering | 72.20% |
| Voting power held by holders of our Series AA Preferred Stock after giving effect to this offering | 27.80% |
| Use of proceeds | We estimate that the net proceeds to us from this offering will be approximately $167.2 million (or approximately $192.7 million if the underwriters exercise their option to purchase additional shares from us in full), at the public offering price of $10.00 per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We currently intend to use the net proceeds of any offering of securities for working capital and general corporate purposes and for growing our live TV streaming platform. We may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement our business, although we have no present commitments or agreements to enter into any acquisitions or investments. |
Paid subscribers’ numbers are strong. They rose 47% year-on-year, reaching close to 286,000 as of June 30. This growth was in spite of the lack of live sporting events during the Covid-19 nationwide shutdown in the Spring.
FuboTV’s most recent quarterly earnings report listed a 53 percent increase in year-over-year second-quarter revenues that totaled $44.2 million. The company is projecting revenue increases of [up to] $54 million. Projections of the Q3/2020 subscriber base is north of 370,000 by the end of the year. Those numbers are very good.
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