Speaker 1 0:02

Welcome to this week's edition of the Dan Rayburn podcast, the show that curates the streaming media industry news that matters most, unvarnished, unscripted and providing you with the factual data you need to know, without any of the hype, the Pulse of the streaming media industry.

Speaker 2 0:20

Welcome to the Dan Rayburn podcast. I'm Dan Rayburn for a special podcast today with David Gandler, who's the co-founder and CEO of Fubo. David, thanks for joining me today. I know you've had a busy morning. You just finished your earnings.

Speaker 2 0:36

It's a busy day for you, so, for listeners, david and I are recording this on Friday, may 3rd, about an hour after Q1 earnings have been released. So, david, a lot to talk about today, but I want to keep this digestible for listeners. So a few things I'd love to cover obviously, what you did with earnings in terms of announcing some key things there, and I think the key takeaway is not just the in terms of how you're growing subscribers, but it's really improving free cash flow, and to me, that's obviously super important, as it is to a lot of others, as you go towards your profitability goals in 2025. So we'll talk about that. I want to talk a little bit about what you've recently done with the funding, because you reduced your debt, which was interesting.

Speaker 2 1:21

We've seen other companies do that in the market as well. I want to talk about the fan experience and what engagement really is going forward. There's so much fragmentation, as you know, in the market of the suit in terms of what Fubo has filed, so maybe we could just start there for listeners so that they know there's only so much David can talk to obviously legally and legally you know they're in the middle of a lawsuit.

Speaker 2 2:21

There's only so much that can be discussed in detail, even you know, even legally. So I appreciate David being here and talking about what he can. But so, david, let me just recap real quickly. So you filed a complaint in the US.

Speaker 2 2:26

The joint venture that Disney Fox and Warner Bros Discovery have talked about in terms of launching a yet unnamed JV sports streaming service really a skinny bundle, right? A couple advancements, or not advancements, updates, I would say. From this week there's been a letter that has been sent to congressional leaders by a total of eight co-signers and including four content broadcast owners, where you're urging committees to hold hearings. We have also seen from your information you put out today in the Q1 earnings that a date has been set by the court for August 7th for a hearing date and that it intends to render a decision before the launch date of the JV, which we don't have an exact date there, but there are rumors that it would be September. So maybe just the first question to really ask you here is what is it that you really want listeners to understand that is taking place, that is making it what you're saying is unfair. Uh, the way you have to license content from these content owners.

Speaker 3 3:30

Yeah, so, um, look, it's a fair question. Um, it's a complicated issue and I talk to licensing executives often about it. I'm not sure everybody actually understands, uh, what's happening uh in the market market. And so, if you think about antitrust law in general, it hasn't changed in 100 years, right, and I think there's sort of you know, I would say probably about five pillars or so in antitrust that are important. The first, obviously, is preventing the abuse of market power, and so in this JV you have three very strong players, right Disney being the largest, fox, as well as Warner Brothers, discovery. The three of them combined have over 80% or 80%, according to the CFO of Disney on CNBC, um 80% of the sports rights. So clearly, um, you know, there's a significant amount of power there, uh, and they're colluding amongst themselves to create a very favorable package. So that's the abuse, a package that none of the competitors, not not only FUBA, abuse, a package that none of the competitors, not not only FUBA, but none of our, none of the other competitors in space um can also provide their customer. Um, the other thing, the other, the second pillar, I think, is the uh promotion of competition in the market. That's, that's what antitrust is about this does not promote competition, because we thought of this idea, you know, nine years ago, where we said we wanted to cater to cord cutters and cord nevers, and so for them to come out today and say, hey, we have a great idea that's very consumer friendly to me is kind of strange, right. And you know, if you're, if they really wanted to do something that was consumer friendly, you know, they would have allowed us to do this as well. And again, we're not asking for any special treatment.

Speaker 3 5:29

The third piece I think in antitrust is protecting consumers, and I think you've seen this, Dan, throughout your career is that everything, including Gmail, starts out free. Everything is free. Prime is free, everything is free, the world is free. Everything is free, prime is free, everything is free, the world is free. And then, all of a sudden, 12 months down the road, you start to see these sort of creeping price ups. We've seen this in Gmail. We've seen this in cloud services that are always free. We've seen this in the direct to consumer streaming service landscape, where things started like $2 per month and now are $4, $5, $6, and $7 and are accelerating well ahead of the pace of inflation.

Speaker 3 6:09

So protecting consumers means ensuring that there's a competitive landscape that keeps prices down and, as you know, we're a company that is very asset light and we would never pay a dividend. We're too small to do that. What would we do? We would reinvest any money that we earn into growth, which would be something normal, which would allow us to maintain lower prices.

Speaker 3 6:32

And the other two components, which I won't get into, really is sort of encouraging innovation which, as you know, we have been limited in many ways in maximizing some of the features that we want to be able to provide. And then, in some cases, it's pretty obvious we weren't allowed to provide ESPN plus. We've offered to pay for ESPN plus and charter gets to offer to its customers for free. So there are things like that, um, you know that that I think are are antitrust and as, and the last one is just ensuring free, or I should say fair, access, uh, to programming. And so you look at this discovery I think is the latest deal. You know we've sent them a proposal in good faith saying hey, listen, you know, we know you guys are launching this, um, this service, with the other two defendants Sorry, I have to refer to them as defendants.

Speaker 2 7:20

That's fine Of course.

Speaker 3 7:22

Yeah, it makes me feel better. Um and um, you know, working with these defendants, we're asking you to provide us fair and equitable terms, the same terms you were going to apply to this JV, and in return, we had no response, other than a very late, I would say at the 11th hour. They've offered us an extension, a status quo extension, with the current unreasonable, onerous terms that we've had in the past. And what's interesting is that in their reactive statement, as they always tend to do and when I say the universal day, meaning all programmers do this is they say hey look, we offered them an extension. They don't want it. Yes, you offered us an extension on onerous terms. And what's interesting about that extension that they forgot to mention in the statement, the reactive statement that they made, was that and, by the way, this extension will last just beyond the launch of the service right.

Speaker 3 8:23

So I mean, if that is not anti-competitive, then you tell me what it is Again. I'm not a lawyer, I'm certainly not the judge, but to me it feels like it ticks all the boxes.

Speaker 2 8:35

I appreciate you recapping that. That was super helpful. You know the two key takeaways, I think for listeners is and you gave out some numbers here is you're asking for rates that are the same as everybody else and you're saying that you're being charged as much as 30 to 50% higher than other distributors.

Speaker 3 8:51

So that's a problem.

Speaker 2 8:53

Closer to the higher. Okay, that's a big number, big number. And then the second is, as we've seen for years, obviously, is the fact that, uh, all all content licensees you know have to take a whole bunch of channels that you commented that you don't want to pay for because maybe viewers are not interested in actually watching it, which raises your costs, which keeps you from doing a skinny bundle, right, and that's interesting just because of some of the precedent. So for listeners, in 1994, the DOJ stopped a group of cable operators and major programmers to prevent new competitors from entering the distribution market, and the DOJ was concerned, primarily based on the control of a significant amount of popular cable programming. So that's similar to what you're saying here. And also in 2018, when Disney bought assets from Fox, the justice department agreed to allow the deal to move forward, except for the assets related to sports and the justice department called them quote two of the country's most valuable cable sports properties.

Speaker 2 10:01

So interesting in that we've seen some similar arguments tied to sports content and how valuable they are. Which I think, is going to come up again yeah, no for sure.

Speaker 3 10:12

But just to make it clear everyone you know, I just want to make sure your listeners understand it's not about fubo and the jv. This is about competition in general and, as you know, both DISH and DirecTV filed declarations in support of our motion. So it's not about us. This is about consumers. This is about a fair and level playing field for all competitors't. The JV is just another competitor.

Speaker 3 10:45

But what has changed today and I think I think you may have asked this or someone else may have asked me this is that, yeah, but it's my programming, I could do whatever I want. And the answer is yes, you can, that is true. However, what has changed is, back then, you were just a programmer providing your content to your distributors, right. And so today, what's changed is you have now become the distributor. You are now a competitor in our field. So that changes the game, and I think this is the piece that most programmers or most licensing teams in the programming space they're kind of working off of inertia where, hey, it's still my programming, I can do whatever I want.

Speaker 3 11:33

Not exactly the second you stepped in and you became a distributor. The rules now, the antitrust rules now apply to you and, by the way, you've seen this before. You just mentioned some historical precedents. There's also one around the consent decree between when Comcast had acquired NBCUniversal, there was that consent decree. Why? Because they became a fully or I should say, vertically integrated content company slash distributor and the government wanted to ensure that there was fair access to content. So what's what's actually transpired is they have now entered into this distribution business and I think they're still working off of this premise that hey, wait a minute, but I was doing this all along, so that has changed.

Speaker 2 12:20

Agreed, you're. Basically. What you're saying is they're now competing against their customer. They're you're their customer, but now they're also competing with you in the same time, but they own the assets, which obviously gives them a huge advantage.

Speaker 3 12:32

Yeah, but they're competing unfairly I think that's the keyword that you probably missed because they are, um, you know, ensuring that we can't offer a product that either has the same feature set, that is unbundled, like they've offered themselves, and allows us to maintain a pricing that is in line with market pricing. So, you know, when you're, when you're sort of, you know, creating a barrier for other participants in the market, that is when you start sort of entering this realm of kind of antitrust.

Speaker 2 13:06

So, in terms of what you want from this right, this is a bigger issue here than just to your point, just what's going on with you. There is a problem in the industry right now around content licensing. So you guys had a carriage dispute with WBD. We've seen Comcast just recently drop Bally's RSNs, YouTube TV lost SMY and MLB Network. I mean, the list goes on and on and on. There's a problem here, fundamentally in terms of how this business works. So when I look through the filing, the three things you're asking for in this specific is three times the amount of damages, um, basically a permanent injunction against the joint venture, and you're asking for the same terms across the board. So what I'd like to know is are you also asking for a third party to set prices of what prices should be for content licensing?

Speaker 3 14:00

Yeah, look, it's tough for me to comment on that. Let me speak, let me step back. No, listen, I'm going to be as transparent as I can. Obviously, I can't comment on the case itself. What I would say is let me give you, let me give you a simple example and you tell me what you think about it. Let's, I'm just going to.

Speaker 3 14:16

I like airlines because most people and the government dislikes, you know, the lack of competition in the airline industry because it impacts, you know, almost every consumer. And so think about this let's pretend Boeing right was a programmer and they provide their planes, slash programming to distributors. American Airlines distributes, you know, boeing airplanes. It sells tickets direct to consumer right and then ends up paying Boeing for its airplanes. So think of Boeing as the programmer, american Airlines, jetblue, delta as distributors, call it DirecTV Dish. You know whatever Fubo, comcast and Boeing says. You know what I'm tired of this. I want to create my own airline. It's going to be called Boeing Airlines.

Speaker 3 15:07

And you say, oh, wow, okay. So now they're entering into this sort of direct to consumer business and so they start selling tickets and then they realize, wow, it's kind of hard to do this. This is a very hard business. I didn't realize I needed to have so many more people. I need to have locations all across the country, airports, service food, et cetera. So what they start doing is they realize they can't offer a service of quality.

Speaker 3 15:33

And so the next time American Airlines or JetBlue or Little Spirit Airlines it's a good example comes to Boeing and they say, well, we're ready to buy more planes. And Boeing says, well, you know what I'm going to charge you, not $50 million a plane, but $100 million a plane, and, by the way, I'm going to force you to buy Airbus airplanes that I don't even own because I want to try to have that type of bundle. And now, all of a sudden, little spirit saying well, if I have to do this, I have to raise my prices, which obviously helps Boeing Airlines grow its business. So it's a very similar situation here, where you know they are looking to build a business while attempting to suppress competition in multiple ways. So I'm hoping that kind of yeah, it's a good example.

Speaker 2 16:22

Everybody understands the airline.

Speaker 3 16:23

That's kind of what we're dealing with. So I guess that's a long-winded way of saying that all we're asking for is fair terms, and the reality is this is actually irreparable harm. Right, I think people are and shareholders and everyone's concerned about irreparable harm. But I just want to be clear when we say irreparable harm, it's irreparable harm to consumers. It's irreparable harm to consumers. It's irreparable harm to all of our competitors, right, every distributor has to deal with it, because it's just unfair. So yeah, it's a bigger issue than just you.

Speaker 3 16:53

It's not us everyone made. But there's always a you know me, as you know, I'm an entrepreneur, so there has to be a positive side to this as well, and I would say that we've only focused on the negative side. But if, similar to what happened in the Comcast NBC consent decree, if we were to able, if the judge ruled in favor of conditioning this JV you know my sense is you know we spent about $1.2 billion on subscriber related expenses, which is, I would say, 95% of that is content costs. But if we were to get just a 10% improvement in our rates, that would significantly accelerate.

Speaker 2 17:35

Drastically change.

Speaker 3 17:36

It would drastically. We would probably be again. Probably. I don't have the numbers in front of me, but you're looking at 10% of 1.2 billion, so 120 million that would flow to the bottom line and potentially take us to cashflow break even well ahead of our plan.

Speaker 2 17:51

Correct. Yeah, no, it's a big impact. I think what concerns me in all of these suits is the word fair pricing. And what?

Speaker 2 17:59

concerns me is, as we saw, with that neutrality and I worked a long time on that two years blogging about that nonstop is regulators, and I talked to many in Congress and Senate who would call me regulators as we know, don't understand how our business works. They don't understand how anything in the internet works, and you know they're doing posturing. They're politicians. So the ideas of fair pricing well, everyone has a different definition of what is fair or what is cheap or what is expensive.

Speaker 3 18:26

So I'm just wondering To me fair is relative. It's all relative.

Speaker 2 18:30

It is, but who's then setting that price that, okay, this is a fair price? Because, let's just say, all these content owners come back to you and everyone else and say, okay, we'll offer everyone the same pricing, but our pricing is now 75% more expensive. It's no longer, in your eyes, fair, but they're doing what you asked for, which is offer everyone the exact same price. So how do we get to a threshold of what is considered fair? Right?

Speaker 3 19:02

So, dan, I think that's a nuanced question and I would say there are two things. We are and maybe, if you heard my opening remarks this morning or if you read through them, we are one of the most, if not the most efficient company, I believe, um in the direct to consumer streaming space. You know I think I mentioned this morning that we hit a billion dollars.

Speaker 2 19:24

You talk numbers, yeah.

Speaker 3 19:26

Yeah, I mean, I talk real numbers. So 2.6 million of revenue per employee, that's in line with a company like Netflix which has, you know, 200 million plus paying subscribers. I think that's pretty, uh, that's pretty exciting. Um, and so you know when I think about what is fair, if you're right and programmers hiked up the price by 75%, guess who would be the only survivor in this whole mess? There would only be one survivor it would be us, because we are the most efficient. So it's highly unlikely that a Comcast or a Charter and Charter has said this on their earnings calls that we're not going to be in the video business if prices keep going up. Right, right.

Speaker 2 20:05

Don't exit it.

Speaker 3 20:06

Right, which means what they will, and obviously programmers can't afford Charter or Comcast or anybody exiting the business, given where things are today and the debt levels that each of these companies is dealing with. So that's an unlikely scenario. So for me, fair pricing is and this is how simple I look at it is. Today, comcast, charter, directv all the largest traditional providers are all profitable. They're cash flow positive. How could it be that Fubo the most efficient company in the United States arguably is losing money? There's no answer for that. For me, fair pricing would be whatever the big guys are paying, which is a fair negotiation. Why? Because the programmer needs the money and the distributor is willing to continue to offer that product, so they always will reach a fair price. The problem is there has to be some kind of collar around that price, and I don't know what that is. That's for somebody else to decide. But arbitration is one way of dealing with it which I don't think anybody would like because that's too dangerous for programmers.

Speaker 2 21:13

Yes, agreed yeah.

Speaker 3 21:15

I mean I would like that because that would obviously be fair. But the other side of this is that there has to be some collar where you say, okay, I mean again. I go back to my Boeing example. You can't charge like if American Airlines buys a Boeing airplane for $50 million and Spirit comes in and says, hey, I need a plane for this segment of the market that I'm attempting to build. They can't just go in and say, well, okay, you want that same 737? Okay, that's going to cost you $150 million. Like, there has to be some kind of correlation.

Speaker 2 21:49

Guideline of some kind.

Speaker 3 21:51

Something we cannot continue. Fubo, as one of the smaller distributors, cannot continue to subsidize. You know all of these mistakes, all these things that they're trying to do. That don't make any sense and, as you know, this is the best business in the world. There's no churn for them, right? Because people are moving from DirecTV to Fubo, to YouTube, et cetera. So there's no churn, there's no technology costs. They don't need to focus on marketing. Think about how much money, like I bet you, if you look back historically keep me honest here the ESPN pre-streaming, espn global marketing budget global, I believe was below $50 million per year. Why?

Speaker 3 22:35

Because, the distributors spent all the money marketing, whether it's the US Open or Monday Night Football, et cetera. So it's an excellent business. It's an infinite sum game. Everybody's a winner. You know, I'm not sure what's driving all of this, but again, we just want to make sure that there's fair pricing so consumers don't suffer.

Speaker 2 23:11

So it's been reported that the Justice Department plans to scrutinize the new JV but have not notified the companies of a review as of yet. In March, disney did make reference to the three companies having deal terms in place but not having legal contracts in place, hence probably why regulators haven't talked to them as of yet. Also just obviously interesting to think about, and again you don't have to comment. So just obviously interesting to think about and again you don't have to comment. But if the rumors are true that NBCU wins the rights for NBA content that TNT currently has, that obviously would impact their JV package quite a bit because WBD would lose a third of the national NBA package. So they'd still have NCAA March Madness.

Speaker 3 23:43

Right. But to be clear, Dan, that wouldn't take place, if I'm not mistaken, until the following season.

Speaker 2 23:48

Next year Correct Right, but one year clear.

Speaker 3 23:49

Dan, that wouldn't take place, if I'm not mistaken, until the following season Next year, correct?

Speaker 2 23:53

Right, but one year, you know, is a really solid head start. Yeah, okay, true, you launch with it, but at the same time, as consumers have seen, man, this stuff keeps disappearing from streaming services, it seems every year going someplace.

Speaker 2 24:03

new, which is the next thing I wanted to discuss was is just all the different carriage disputes and what's going on out there. And also, David, maybe I should have mentioned up front, in case anyone's wondering, I do not own any stock in Fubo. I don't own any stock in Warner Bros, Discovery, Any of the companies we're talking about Disney, Fox. So I got no skin in the game here from a stock standpoint. You guys aren't paying me in any way, shape or form. So just to put that on record there.

Speaker 3 24:28

Yeah, we couldn't pay you if we wanted to because, as you know, these programming deals are making it quite difficult for us to make any money.

Speaker 2 24:34

Well, I mean your earnings we're going to get to in a minute.

Speaker 2 24:36

We're good today, which was good to see, cutting that loss, which is good. So let's talk about carriage disputes, without going into the recent one that just happened, with WBD channels being removed from your service on April 30th. As I mentioned earlier, we've seen so many channels leave platforms, so I'll just take SNY. As a Mets fan, customers went to YouTube TV originally to get it. They dropped it. Then they went to you. You guys have dropped it. Now they have to go to Hulu plus live TV. We'll see how long they keep it for. But what do you think is going to change or will change? Because right now the consumer experience of where to get what content, especially RSNs, as you know is so fragmented and so complex. Does this ever get fixed in the industry?

Speaker 3 25:25

You know, I think ultimately all of the players in space become more rational. I mean, we can only look as far as music streaming, right, where all the content you want is available on spotify or apple music or amazon. So, um think, eventually and by the way they were, you know the uh, the platforms also had issues at the time working with um, you know Spotify and others because they were like, well, we don't want the industry to look like this. Eventually they came to their senses and now, you know, looking at the stock prices of Warner Music, etc. Things are going exceptionally well. So that's, in my view, a big point here for video streaming.

Speaker 3 26:16

I think video streaming is not too far behind and it takes some time for things to rationalize but, as I said, there is no rational explanation. Time for things to rationalize, but, as I said, there is no rational explanation. There is no model that you can put together that does not point to the value of the type of distribution that cable has allowed for, the types of profits that everybody made, no matter if you were a small programmer or a large programmer. Everyone was making a lot of money. So my sense is we're very focused on not being an app store, which I think many are. We are a video bundler, a video aggregator, and we're looking to build the greatest experience possible.

Speaker 3 27:03

And I gave you my earlier example. I mean, we offered to pay for ESPN Plus right, which is well above market when Charter gets it for free. So you know, we believe that we'll continue to try and aggregate content to the best of our ability, and I do think that anyone who does acquire sports rights ultimately will want that to be fully distributed, because one they can make money on it, they can sell advertising against it and it's also better for the league. So I think it'll take some time, but I think the bad part about this in the short term is the fact that customers are forced and this is kind of one of the things that we've talked about at Capital Oil or on Capital Oil is the fact that consumers are forced to pay multiple times for the same content.

Speaker 2 27:46

Same piece of content right.

Speaker 3 27:48

That to me is to some degree extortion, right, it's hey, here's six games here and here's one game on my own platform. But good news is it's not pay-per-view. You still get all my other channels, right, but I blame the leagues for that.

Speaker 2 28:03

Honestly, I blame the leagues, right? I mean, I know you work with sports leagues so you have to be careful here but let me give you an example, like if you watch the Yankees or you like the Yankees and want to get a hundred percent of their games this year, you have to have five different distribution platforms.

Speaker 3 28:18

I'm not disagreeing with you, but before the reason why again, I'm not going to you know, I think the leagues have done a good job in the past. Again, remember I was saying antitrust law hasn't changed, programmers have changed their business. It's the same thing. The leagues here have not changed their business. They distributed games to TNT. They used baseball, they had RSNs, they had TNT, they had Fox, they had ESPN, but the cable bundle had all of them and so you had all of them in one place, but the leagues were distributing to sort of multiple players within that ecosystem. I think they're still doing that. The problem is that a lot of this content has left, or some of the content has left, the bundles into these plus services.

Speaker 3 29:07

Right Exclusive has left the bundles into these plus services Right, exclusive Right, and that has created this situation where you know I'll give you some interesting information that I haven't said before. Let's just say, when I look at our user base right 1.5 million plus North American subscribers when I look at the overlap of plus services with Fubo, it's you know again, I'm not going to tell you which one is where, but let's just say they are all roughly the same and let's say they are all between, call it, 40 and 52%, not surprising Wide range. Yeah, so people are buying Fubo and then they're forced to if they like it Supplement it.

Speaker 3 29:52

Yeah, they have to supplement it, and the key in this supplement is that, hey, you're not just getting that game, you're not just paying for that one game, you are paying for hey, good news people, you're paying for the same 12 channels you get on Fubo or Charter or Comcast or wherever. So that, I think, is where things get unfair, and this is why the government does need to step in at some point, because all of this comes down to, you know, is the consumer being price gouged? And I believe that's the case. And, by the way, you know you watch all these news channels they're talking about inflation and the price of eggs and you know, you know how many egg cartons you can buy if you weren't double paying or triple paying for content. There's tens of billions of dollars that consumers are paying for content that they're already getting somewhere else. That's the problem, in my view.

Speaker 2 30:43

Yeah, I believe it. I mean, I, as a fan, just hate how the leagues, in my opinion, are just going after the dollars and not thinking about the fan experience. And if it wasn't for the tech companies, right, think Apple and some of the others go to a bar Friday night if the Mets are on Apple TV Plus and ask them to turn on the TV. They're like what the hell is Apple TV Plus? They don't know, they have no idea, or how do you even get it in a bar there? So, right, I think the fan experience is is absolutely we're going to try and solve.

Speaker 3 31:09

We're going to continue to fight for our fans, fight for our subscribers, fight for our customers and you know, I think we'll. We will get there eventually.

Speaker 2 31:17

Uh, unfortunately, but you have to survive to get there well, you know it's interesting.

Speaker 3 31:22

You say that I think people have pundits. I'll say pundits. People, pundits have said since 2016 that we are always 12, 14, 16 months away from shutting the company down. So this is an ongoing issue or statement for the last 10 years and, as you can see from our long range plan that we put in place in 2022, I believe we presented on August 10th of 2022, roughly, I think it was in August but you know, we have been delivering exactly what we said. You know, five consecutive quarters of you know moving towards our profitability goals and we're going to continue to do that. So, you know, I towards our profitability goals and, uh, we're going to continue to do that. So, um, you know, I feel good about that.

Speaker 2 32:12

Let's talk about RSNs for a minute, because, uh, fuba has over 35 RSNs and, in addition, direct deals with leagues and broadcasters, and I wondered, if you could just talk, how do you decide you can't license every RSN out there? Obviously, how do you decide which RSNs to license? Is it based on how many of your subs live in that city, how big the teams are, what the league is? How do you decide what's best to put in the package?

Speaker 3 32:37

Yeah, I would say that it's everything you said and a lot more. Remember we collect about 2 billion data points a month.

Speaker 2 32:45

Is that what you're collecting? 2 billion.

Speaker 3 32:46

Yeah, and we're good at using data, and if you say, well, why are you so good at using data? Or some one of your listeners thinking that, well, you tell me what company in the pay TV industry has dropped a major provider of content? In this point I'll say TNT, tbs back in, was it 2021? 2020, actually? And still has managed to grow double digits year after year. So we're good at looking at data. We're great at experimenting with packaging, promotions, trial durations, promotions, trial durations, and so that's part of what we do.

Speaker 3 33:33

This is a company born in the direct-to-consumer world, and many of the managers here, including myself, have been in the subscriber game since it started almost, and many of them out of college have jumped right into subscriptions what they know. So I believe we have an edge there, and so we've been pretty good at picking content that works for our base and, by the way, we have a very unique base relative to others, because the question that the average pundit will say is well, I have YouTube TV, why do I need you? And clearly we are attracting and engaging a customer base. That one likes our product, likes our packaging and just likes the quality of the service in general.

Speaker 2 34:18

Let's go through some of the numbers here. You know, david, one thing you know I'm always disappointed in is a lot of people in the industry don't really look at numbers as they should, especially for public companies. It's incredible how they don't know the finances, the P&L, what companies are working on.

Speaker 2 34:33

So let me just recap earlier in the year, you reduced your debt for the company by 28.3 million and you extended a meaningful portion of your debt maturities out to 2029, from 2026. So, for those that don't understand, what that's giving you is more flexibility as you work towards your your 2025 profitability goal, right, so that's certainly a good thing. Uh, that ties into what you're talking about in terms of where the company is going and growing, uh, reducing the burn, obviously, of cash. So let's go through your earnings, which you you talked about this morning, uh, q1. So you added 226,000 subscribers in the US, which was up 18% year over year. You ended the quarter with 1.5 million US subs. Your domestic revenue was almost 400 million, so 394 million, which was up 24% year over year. Your ARPU was up 10% which is very important.

Speaker 2 35:27

Average revenue per user. So that was $84.54. The rest of the world is still a small market for you, but almost 400,000 subs at 397. So that was up a little bit as well. You had a 10 million improvement in free cash flow and you ended the quarter with 175 million in cash and cash equivalents. So one of the things you've been saying for a couple of quarters in a row now is you believe you have sufficient liquidity to fund your current operations plan as you go towards your profitability goal in 2025.

Speaker 2 36:00

You also talked about the new. I don't really want to call it a new service, but let's call it a new version of your service the free, where you now have 165 fast channels on your platform. So a couple of things we can hit there. But let's hit the fast stuff first, because there's so much talk about fast but no numbers ever released around advertising outside of Vizio, who every quarter puts out numbers of the revenue they're getting on the ad side for the fast channels. But how big is fast to you? Not from an ad side, but is fast going to be an option where it pulls people into the paid service?

Speaker 3 36:37

Yeah. So I think that's a great question. I would say somewhat differently you said pull people into the paid service. I would say the opposite. It's keep people that are leaving the paid service Now nuanced.

Speaker 3 36:54

Of course, the reason for that is because you have all these people that are coming into FUBO every month. Some like baseball, some like basketball, some like football, some like Olympics, soccer, etc. Like football, some like Olympics, soccer, et cetera. When these people watch whatever event or season they wanted to watch, we basically completed our transaction with them. They're happy, right, they saw the game, the DVR, whatever they did, and so when that transaction ends, we want to make sure to keep those people within the ecosystem so that we can continue to monetize them.

Speaker 3 37:31

Once we've already paid for that person to come in via our subscriber acquisition cost, we want to ensure that they remain in the ecosystem and we give them an easy way to watch other content that we can then monetize them on.

Speaker 3 37:46

And when they're ready to come back which we know via our reactivations is that they already can very quickly reactivate and in the meantime, we're collecting all this other data about them so that we can create an even more compelling experience when they sign back up for the service. So it's not about trying to drive more traffic through the front door using the fast channels. I think that's a strategy maybe other companies are focused on, but we've taken a very nuanced approach and we're looking to maintain or retain customers in an ecosystem where we can really attract or engage customers through, I like to say, along the demand curve, where Fubo is probably the highest cost product out there because it's so sports heavy, uh, so RSN heavy, um, but at the same time we want to offer someone a package for zero, a package for 10, a package for 50. And then obviously this, the most premium package of them all, which has, you know, all the sports fans, all the sports confident fan would love.

Speaker 2 38:45

Okay, so it's more retention, uh, which, which really isn't that surprising, it's monetizing users right?

Speaker 3 38:50

Remember, we have a big set of users coming in every fall, and so if you already spent, I'm just making up a number here. But let's say you spent $100 to bring someone in the door. When they leave, you don't make any money. So why not try and offer that person something or an experience that you know you might be able to drive one, two, three, four dollars a month of revenue for the company and continue to reduce your expenses and cost of acquisition?

Speaker 2 39:19

And how do you see retention? Do you see any trends in retention in terms of how consumers are turning a service on and off over the last couple of years? And the example I'm going to give here is is years ago Disney uh wouldn't give out numbers for Hulu plus live TV subs after they were giving them out for a while. And the reason they said was people are turning off live TV on and off so many times throughout the year that if we give you any numbers, we just don't think it's a good data point for our business. So over the last couple of years, has when people turn the service on and off changed? Have you seen a trend?

Speaker 3 40:00

So look, we have. I think that's somewhat true. We have always provided our sub-numbers, as you know. We have always. I think maybe 12 out of 13 quarters now we've exceeded expectations or guidance. So we continue to provide all of that data because it's our job to do that. Again, we're a direct-to-consumer-born company, so we understand sort of the seasonality and dynamics of that. But in terms of retention, look, we saw very strong reactivations in the first quarter.

Speaker 2 40:39

Based on which sports? Why?

Speaker 3 40:41

Well, what's interesting? Obviously you know this already women's college basketball was an unexpected hit ready.

Speaker 3 40:50

Women's college basketball was unexpected, you know, hit. What's actually interesting is that it offset whatever coverage we didn't get on the men's side via TNT. Uh, so that was a very good. We had all the women's games, I believe, uh, cause it was on ESPN. Um, so we've seen uh retention improve this quarter for sure. I think I even said in my statement that March may have been the best March on record, um, in terms of churn, engagement has improved. We've seen engagement approved by, you know, roughly 2%. Um, you know, your ad revenue grew again. Ad revenue grew, which means people are staying on the platform and watching.

Speaker 3 41:26

So, look, the average customer is watching five hours of programming per day. That is a ton of viewership, of mindshare, of timeshare, any way you want to look at it, and it is the number one most important KPI for Netflix. They just announced their earnings and they said look, forget about our sub numbers. It's all about engagement, and what we've been saying all along is Fubo, in particular, is a highly engaging platform because of the breadth of content that we provide and that, coupled with the user experience and our ability to help people discover content or programming that they, like you know, seems to be working well.

Speaker 3 42:11

And again, look at our fast channel viewership nine hours, uh, you know, per viewer, nine hours a month, that is a, actually, that's also a canary in the coal mine, for you know, you know, uh, players like Warner Brothers, discovery, right, if fast channels are nine hours of viewing per month, you know, that really speaks to you know, what is the? What is the? What are those unwanted channels really? How valuable are they? Right, which again is part of the reason why, uh, you know, we're, uh, we've sued, uh, this sports cartel.

Speaker 2 42:48

So this business, as we know, is all about economics of scale and we're talking a lot about pricing here, and let's just take you guys out of the picture. Look at any virtual MVPD. There's a huge cost in content licensing programs, as we all know. But then the question for you is when you see lots of channels 5, 6, 10, 15, removed from a bundle, how come pricing never goes down? Why doesn't any virtual MVPD ever lower pricing? Because if you lower pricing to a certain degree, you can't give it away. Wouldn't you get more subscribers, which over time would drive more revenue to the business? Or is that simply bad business because it's not making money?

Speaker 3 43:28

Well, so there's a couple of pieces. You know it's funny. You said virtual MVPDs, so I think it's important to make clear to your base who are these players. So one, the one you know is Pubo we are a virtual MVPD. The one you know is Kubo we are a virtual MVP team. The second one is owned by one of the defendants right, which is Hulu Live, which is owned by Disney and ESPN. And the third one, the one with one of the largest and fastest growing cloud services, is Google YouTube.

Speaker 2 44:05

TV Right and Sling TV is owned by.

Speaker 3 44:08

And Sling TV is owned by a traditional player which has traditional rates, so that's the reason why I don't include that one. But a true virtual is one that has the rates that programmers offer to virtual employees.

Speaker 2 44:19

Which isn't in any other business, which you're not.

Speaker 3 44:22

Right. So the reason I say that and this is part of our suit is that there's an artificial in our view, an artificial MFN to the virtual lemmupedians. Now, again, sling, being tied to a traditional satellite company, gets the rates of the satellite company. But when you look at the virtual space specifically, there's only three companies that are in this sort of space, right? One of them is owned by Disney, right? So I'll take that one out of the equation. The third one is Google's YouTube TV, which has cloud deals with all of these players, and so when you have this artificial MFN, we're really the ones that are stuck holding the bag because we can't do anything. And there's a you know a number of deals that are happening. You know where they rebate back some of these players in the form of advertising dollars, and the cloud services.

Speaker 3 45:17

So I mean, it's like I said, this is a completely rigged virtual MVPD space and we are unfortunately the ones that are forced to uh, bear the the bear. The grunt of it. So to your point, or to your question, is why don't we lower prices? We can't because you know that, despite all the success that you've just highlighted, double-digit improvements both top and bottom line, we're still losing money, right, and we still have a plan to hit. So we cannot lower prices. Of course, under normal circumstances and I said this earlier we are not a company that's going to buy back stock. We are not a company that's going to offer it.

Speaker 2 45:54

We can't afford to.

Speaker 3 45:55

Right. Even if we could, we wouldn't why? Because we would reinvest those dollars back into lower prices, more promotion, drive more subscribers and really attempt to build out our business, which again, if the government looks at this properly, wow, that means you are going to keep prices lower for longer. That's kind of how I look at it, but unfortunately that is not the case because of the artificial pricing that we're dealing with.

Speaker 2 46:19

Okay, and also just for listeners. You mentioned MFN, which most won't know, Sorry.

Speaker 3 46:23

most favored nation.

Speaker 2 46:25

Yeah, most favored nation. So the idea is that it requires suppliers to treat a particular customer no worse than all the other customers, and what I'd suggest is let's not go into that in detail.

Speaker 3 46:34

Yeah, let's not go into that, yeah.

Speaker 2 46:36

If they read your 73-page filing you can learn all about MFNs and what you're talking about and some of the credits or rebates which I would suggest. If you really want to understand what's going on here, read the filing.

Speaker 3 46:48

It's a fascinating filing it is.

Speaker 2 46:51

It's pretty interesting. I wish some of it wasn't blacked out. I'm not surprised. Right, there's some there. It's proprietary information.

Speaker 3 46:56

Well, the juicy, juicy stuff is blacked out.

Speaker 2 46:58

Right, right, of course, as it always is, so I wasn't surprised. David, I super appreciate your time today. I want to give you just the last word. Is there anything that, um, you know we didn't cover that. You'd really like listeners to know about the business. What's going on in the industry? Some key takeaway.

Speaker 3 47:14

Yeah, I mean I'll just go back to what you said around the financials. You know, again we are um. This, this quarter is the fifth quarter, or represents the fifth quarter of year over year. Uh, improvements in free cash flow and adjusted EBITDA the fundamentals clearly have nothing to do with the stock performance. I think you were alluding to that earlier. So we're continuing to improve our business. We're continuing to remain the most efficient company in the space. We have a tremendous amount of value that we are going to provide over the long term, both to consumers from a pricing perspective, cost perspective as well as to our programming partners and our leads, and I think that's going to continue over time and we're really going to be focused on really developing a state-of-the-art user experience leveraging an AI company that we acquired back in 2021. We're very excited about the space. Once we can solve for this one issue, which is just fair and equitable playing field, I think things are going to go really well for us and for the industry.

Speaker 2 48:21

And your video quality is very good. I can just say just the amount of people I hear from because I hear from consumers all the time tied to the industry Video quality is very good. Having sat with you guys in person at my streaming summit last October in New York City really talking about what you're doing regarding DVR, some of the 4K that you're doing, right, it's important for some of your users because of sports.

Speaker 2 48:43

We obviously could have had a whole separate podcast on that, but there were some interesting notes in your shareholder letter today in terms of some of the technology you're working on, so I'd encourage listeners to read that if they want to hear what you're doing. So, david, appreciate your time today. David Gandler, co-founder and CEO of Fubo, especially today busy day for you with earnings, so appreciate you being here. If anyone has any questions, you can always reach out to me directly, dan, at danrayburncom. I'll be happy to answer whatever questions I can, but if you have any other questions, hit me up on LinkedIn. Thanks again, david. Talk to you soon. Thank you for having me, if you enjoyed the show.

Speaker 1 49:18

Send it to a friend, have questions for Dan or Mark. Connect with them on LinkedIn at any time and.