Gandler sits down with Yahoo Finance Live to discuss how these media companies have "utilized pernicious MFNs [Most Favoured Nations clauses] to distort pricing," driving up Fubo's cost of operations and forcing it to bundle more of its content together.
"This is almost borderline racketeering because what's happening in the industry is that the media companies are saying, 'look, if you want the full bundle, go get a paid TV subscription,' and at the same time, they're taking certain pieces of content out of the bundle to force the consumer to get that one extra game or two extra games to pay for another service," Gandler explains. "They're basically double paying in more than, I would say, 30 to 50% of cases for the same content.
FuboTV is going after Disney's ESPN, Warner Bros. Discovery, and Fox, alleging that the group's new venture is stifling competition. Now in the anti-trust lawsuit, FuboTV called the new partnership a, quote, "Sports cartel that has blocked FuboTV's playbook for many years," and is, quote, "effectively stealing it for themselves."
Let's discuss that and more. We want to bring in David Gandler. He is the CEO of FuboTV. David, it's great to see you. Thank you so much for taking the time to join us here on Yahoo Finance this morning.
And so they have utilized pernicious MFNs to distort pricing. They forced us to bundle content in the hundreds of millions of dollars of cost to us that customers didn't really want. And then they come up with this brilliant idea of, hey, we want to attract customers that are not interested in this sort of larger bundle.
So, when you put all of that together, and the aggressive fees that are well-- grossly above market, actually, you end up having a service that has basically taxed customers a ridiculous amount of money over time. And so, my view here is very simple, that there are significant monetary reparations in order here.
And we will gladly return those to customers, anything that we're able to gain in the form of promotions and discounts going forward. So, this is a real situation. It's anti-competitive. And all we ever wanted to do was to compete on equal terms, but that has been proven to be impossible.
SEANA SMITH: David, when it comes to pricing, you quickly mentioned that there-- I guess how significantly do you see bundling tactics like this eventually raising prices for the consumer?
DAVID GANDLER: Well, I mean, one of the worst things about this and, you know, again, I'm not a legal expert, but to me, this is almost borderline racketeering. Because what's happening in the industry is that, you know, the media companies are saying, look, if you want the full bundle, go get a paid TV subscription. And at the same time, they're taking certain pieces of content out of the bundle to force a consumer to get that one extra game or two extra games to pay for another service.
So they're basically double paying in more than, I would say, 30% to 50% of cases for the same content. So, there's no way that prices will not continue to escalate. And I think one of the ideas is, if we reduce the number of competitors in the space, we can basically run the table.
BRAD SMITH: If we did see this deal go through, and there was some type of moderation or outflow because now you had consumers who were gravitating perhaps towards another service, what would that mean for FuboTV specifically, as you think about the liquidity, as you're funding the current operating plan that you had laid out to investors back in November?
DAVID GANDLER: Yeah. Well, I'm glad you brought that up. I mean, you know, this is not something new, right? You're talking about media companies that own their own distribution. And as I said, they distort pricing to us. This is something that we've been dealing with for nine years.
And, you know, if you look back historically, obviously, I can't comment on the current quarter or 2023 full year, but what I will say is looking backward, is that we have done a tremendous job in being very efficient. We've met or exceeded guidance, I would say, 13 or 12 to 13 times out of the last 14 or 15 quarters. We have improved-- we beat consensus three times on the bottom line.
And, you know, we're continuing to march down our path to achieve profitability, regardless, in 2025. But we shouldn't have to do it in such a way where they block us in every possible opportunity to grow our business. Frankly, there are significant damages here because we have not been able to compete fairly with a group of companies that they put us in, which is with Hulu.
We've not been able to package in the same way. We don't have access to ESPN+. And so, you know, but we still believe that we're on track with respect to our 2025 plan, again, based off of the last quarter numbers that we provided in November.
SEANA SMITH: David, just pushing back just a bit, because I think you could, or people out there could, make the argument that, hey, this industry is more competitive than it had been a decade ago, two decades ago when you have the entrance of many of these larger tech giants. They are now on the playing field there. What's your response to that argument? The fact that it's not just anymore about some of these legacy players.
DAVID GANDLER: But it is, because if you think about what they've done, they've weaponized an American institution, which is the NFL. You cannot-- at least in my view, is they have these rights for the next eight to nine years going into 2030.
So, when you control 100% of the National Hockey League rights, national television rights, and 100%, at least as of today, the national NBA rights, 50% of NFL and college football, you're basically dealing with a group of companies that are controlling for now, at least, and for the foreseeable future, this industry, with a goal of colluding and ensuring that they maintain that type of control. What's interesting to me is, and I'm sure you would agree with this, is that no longer can they consider merging because that, obviously, would be a non-starter for any DOJ to consider.
So therefore, this is the next best option. Let's circumvent merging and just collude via this, I'll call it-- because they haven't named it yet, so I'll name it for you guys, which is sports cartel TV-- to really marginalize players like Fubo.
BRAD SMITH: This feels like a reversion back to some of the cable bundles that we had known in the past, but on streaming grounds. And I would love to know how consumers should perceive these partnerships that are moving forward?
DAVID GANDLER: Yeah. Well, look, I mean, if you look back to my shareholder letter of 2021-- I believe it's actually exactly maybe three years ago-- I said we were going to move from bundling to unbundling, to the eventual rebundling, of this content. We have conducted numerous surveys. We collect 2 billion data points a month.
And basically, what we found is that consumers, three out of four consumers prefer to watch content on an aggregated app versus a direct-to-consumer app. And I think these media companies are learning the hard way-- tens of billions of dollars of losses that they're asking us to subsidize-- that it doesn't work and that the churn rates are too high, the marketing costs are too high, the tech costs are too high. And so the only way to do this is to really stomp out competition.
And I think consumers should be very nervous about this because I think, historically, we've seen this playbook. Whether it's with email or with any other services, they start out either free or cheap. And very quickly, if you look at the compounded annual growth rates in terms of pricing for any services, you'll see how quickly they ramp up once they start to feel comfortable in a market.
So this is very bad for customers. They should really be upset about this. They should be worried about it. And, you know, we've set up a landing page, savemysports.com, really asking people to read the letter that we put out there to support free choice and competition. Because ultimately, it will benefit them.