Disney and Microsoft Make Moves
Disney is a company I no longer hold, but one that I did once hold and still have some interest in. Microsoft is a company I hold that has stabilized my portfolio in some bad years but has now been flat for about eleven months now in the upper-low $400s. Both companies are making some moves that I think are honestly pretty solid. We’ll start with Disney before moving to a slightly more relevant company to my portfolio.
This Disney deal is a bit odd, and it took a read-through or two of the WSJ article before I really got what was going on. A few months back, Disney, along with Fox and Warner Bros tried to push a sports streaming service, Venu Sports, through the market. I thought it would be pretty minor in the long term, but FuboTV, which is entirely sports-focused in nature, did not have such a casual view of this proposition, so they sued. Things worked out, and Fubo got the deal blocked out. Then, things worked out even better because Disney just decided to push Fubo out of the way with some money.
Before I continue, it is worth mentioning that Fubo is a company and stock that has really struggled as of late. Only a few years ago, (although 2019 is now over half a decade ago) they had to do a 30-1 reverse stock split which is always a bad sign, they had been getting hammered by competitors, and every sign has pointed downwards. They were not coming from a position of strength.
Basically, Disney got 70% of Fubo and they merged Fubo and Hulu live. Fubo is getting over $200 million in cash and about $150 in a loan. In return, the lawsuit is ended and Venu will likely get pushed through. To simplify it even further, in case this still seems odd, Disney is buying 70% of Fubo. Fubo is then merging with Hulu Live, another Disney property. Fubo will still exist outside of the Disney family if you want, but all of its property will also be on Hulu, I think. Fubo also gets the rights to use ESPN on its service, as well as some other Disney material. Fubo also gets the rights to Joy Taylor, Skip Bayless, Emmanuel Acho, and the entire executive team over at Fox Sports (if you want to look that up you can, but just know it’s pretty gross and my joke was very funny).
I give this deal for Fubo an 11/10. This is a company on the brink of death, and they have pulled this out, somehow. Their stock was up 250% on this news.
I give this deal for Disney a 3/10. This deal was very cheap, but I just do not think Venu is worth all of this effort, I think another lawsuit from another company is possible, and I do not think Disney gets a ton from this. Their stock was down 0.10% on this news.
Now, on to the perhaps simpler but infinitely more impactful news. Microsoft is spending $80 billion in fiscal 2025 on data centers, with AI as the primary focus. The data centers will train AI models and “deploy AI and cloud-based applications.” And that’s it. That is their entire gambit. If this works out, which I feel confident it will, this would be like buying a quarter of the buildings in New York in 1980.
This is a gigantic investment, to say the least. They are dropping more than the annual GDP of Croatia in just the next 12 months. And I think it is a great idea. Microsoft has more cash than the King of England, I do not want them spending it on stock buybacks or dividends (bleh). In the future, there will be more of a need for AI infrastructure, guaranteed. If that does not work out, meaning that Hell has frozen over, then they can repurpose these data centers because right now, there is no single better investment for a company to make than data centers. There is 100% surety in the inevitability of its use. Microsoft just bought every shovel in the country for a gold rush.
Maybe this indicates another flat year of building their infrastructure up, but so be it. Microsoft is positioned extremely well, underlying numbers are growing really well, and this move just further sets up the company for long-term success. This is probably an 8/10 move.
