Investing.com -- Shares of Fubotv Inc (NYSE:FUBO) fell 3.8% after Bloomberg reported that the U.S. Department of Justice (DOJ) is investigating Walt Disney Company's (NYSE:DIS) acquisition of a controlling stake in the streaming company. The probe is centered on concerns that the deal could lead to undue market concentration in the sports streaming sector.
The inquiry into the transaction, reported by Bloomberg News, citing sources familiar with the matter, comes after Disney announced in January its plans to merge its Hulu + Live TV service with FuboTV. This merger is set to form the second-largest online pay-TV provider in North America, trailing only behind YouTube TV.
As part of the agreement, Disney will secure a 70% majority stake in the joint Fubo and Hulu + Live venture. FuboTV's CEO and co-founder David Gandler is expected to lead the new entity. Notably, the deal does not include Hulu's primary video-streaming service.
The DOJ's scrutiny adds a layer of uncertainty to the merger, which had been viewed as a strategic move by Disney to bolster its streaming offerings amid intense competition in the industry. The potential for regulatory challenges could impact investor sentiment as the market assesses the likelihood of the deal's completion under the proposed terms.
The decline in FuboTV's stock price reflects immediate investor reaction to the news of the DOJ's investigation. The full implications of the probe for the merger and for FuboTV's future operations remain to be seen as the situation develops.
Fubo declined to comment on the matter, while Disney did not immediately respond to Investing.com's request for comment.