The Biggest Winner of the Venu Sports Fiasco May Surprise You

A sports streaming service that could've rocked the world will never get a chance to roll. Venu Sports -- the partnership of Disney (NYSE: DIS), Fox (NASDAQ: FOX), and Warner Bros. Discovery (NASDAQ: WBD) to combine their sports content into a single digital platform that would set fans back $43 a month -- has been nixed before its launch.

The market's reaction to the news that broke just before Friday's open was interesting, to stay the least.

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• Disney declined 1% by the closing bell.
• Fox moved 1.6% lower, marginally worse than the S&P 500's 1.5% drop.
• Warner Bros. Discovery was the laggard of the lot, shedding 3.6% of its value.

Venu could've moved the needle. With many of those still subscribing to cable or satellite TV plans doing so primarily for easy seamless access to live sports, this could've drastically escalated the cord-cutting trend. The three partners should've been pummeled on Friday, but Disney somehow beat the market. How? Well, don't be surprised if Friday's price action is just the first indicator that Disney is the biggest winner in the death of the fumbled streaming service that the media stock giant was championing.

Moving the goalposts

Venu would have brought a lot to the programming table. Disney's 80% stake in ESPN was going to be the belle of the Venu ball. The iconic sports network and all of its spinoff channels are already available digitally as ESPN+ for $12 a month. Disney also has pricey deals with NCAA's SEC and ACC conferences that come with their own dedicated networks.

Fox has FS1 and FS2, with rights to various soccer, baseball, and IndyCar content. It's also a major player at the college level, including its deal with NCAA's Big Ten conference that spawned a standalone network.

Warner Bros. Discovery didn't come in empty-handed, but its TNT, TBS, and truTV channels offer magnetic sports programming only when they're not playing primarily reruns of once-popular shows and classic films. The channels are widely available through most TV providers, so outside of HBO's Max, it hasn't had much success in the premium streaming market. Venu thus would've been a big win for Warner Bros. Discovery, and it's not surprising to see its shares take the biggest hit of the three partners.

However, there's one related stock that fell even harder on Friday.

Image source: Getty Images.

Venu, vidi, vici

A big initial winner on the Venu folding was FuboTV (NYSE: FUBO). The sports-centric live TV streaming service was the loudest critic of the partnership, and this past summer it won an injunction blocking the launch of Venu. The stock opened 7% higher on Friday and quickly traded as much as 12% higher. It did give all that gain away, and then some, by the end of the trading day and closed nearly 5% lower.

Fubo is still well positioned to thrive in a world where there is no venue for Venu: Four days before the megaservice was nixed, Disney struck a deal to acquire a 70% stake in Fubo. In exchange for Fubo's dropping its case against Venu, it would receive $220 million in cash and combine its growing but profitless platform with Disney's much larger Hulu+ Live TV service. The combined company would probably be immediately free cash flow positive and serve 6.2 million subscribers, putting it within striking distance of niche leader YouTube TV, with more than 8 million accounts.

Live TV streaming platforms will have a stronger shot at success without Venu around, and now Disney has a majority stake in a platform with two ways to win. Disney's much larger Hulu on-demand streaming service is a differentiator attached to what will now be Fubo's primary live TV offering. Along with Disney+ and the family entertainment behemoth's various bundle offerings, Disney becomes a funnel into Fubo's growth.

Finally, let's channel-surf to ESPN+. Venu may have been a good idea a year ago, but the world of streaming exclusivity is changing rapidly. Netflix, Amazon Prime, and YouTube TV parent Alphabet have locked in valuable licensing rights. Last month, a record 65 million viewers worldwide turned to Netflix to catch its first live doubleheader of NFL games on Christmas Day, an event that will run for at least three years. With leagues splitting so many games across different premium services, Venu was obsolete before it left the womb. Every service is on its own now, and if that's the case, it's hard to bet against ESPN's parent company.

Farewell, Venu. Disney is still on the menu.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rick Munarriz has positions in Netflix and Walt Disney. The Motley Fool has positions in and recommends Alphabet, Amazon, Netflix, Walt Disney, Warner Bros. Discovery, and fuboTV. The Motley Fool has a disclosure policy.