(Reuters) – Streaming provider FuboTV said on Monday that it had agreed to merge with virtual entertainment firm FaceBank Group Inc (PK:FBNK) to expand its over-the-top TV footprint, in a deal that sources said valued privately held FuboTV at about $700 million.
It is a rare example of a merger clinched amid the market turmoil and economic uncertainty fueled by the coronavirus pandemic. More people staying at home during the outbreak will be a boon to the combined company, FaceBank’s chief executive, John Textor, said in an interview.
“FuboTV is one of those companies that we see is likely to do well in this environment,” Textor said. “Their content and the offerings are considerably less expensive than the cable options.”
FaceBank has a market capitalisation of more than $200 million and is controlled by Textor and FaceBank’s chairman and fellow co-founder, Alexander Bafer.
FaceBank also raised $100 million from its shareholder group to support future expansion, according to company filings. The combined company will be led by FuboTV CEO David Gandler.
Founded in 2015, FuboTV has raised over $250 million from media companies including AMC Networks, Discovery Inc, Walt Disney (NYSE:DIS) Co and Viacom Inc. It has about 300,000 to 400,000 paid subscribers, according to one of the sources.
FuboTV started as a sports-focused streaming service and has been expanding to news and entertainment as it adds channels like CBSN, The CW and Pop. Last year, it launched free and ad-supported streaming channels in addition to a paid subscription.
FaceBank is a developer of hyper-realistic characters and digital humans by emerging technologies, like virtual reality, augmented reality and artificial intelligence. Last year, it bought Nexway AG, an e-commerce and payment platform with footprint in 180 countries.
FaceBank said it started to work with FuboTV on the all-stock deal in January and expects to close it by the end of this month. FuboTV plans to leverage FaceBank’s distribution for international expansion and develop more strategic partners like Google (NASDAQ:GOOGL) and American airlines, as it faces off against a growing mix of over-the-counter TV competitors that include AT&T, DirecTV, Hulu, YouTube TV and Sling TV, FaceBank said.