Disney Hulu+ Live TV and Fubo will be merged

Disney will combine the Hulu+ Live TV service with FuboThe companies, which bundled the two Internet TV packages, announced Monday.

Disney will own the majority of the emerging company – the publicly traded Fubo – with a 70% ownership stake. Fubo shareholders will own the remaining 30% of the company. The contract is expected to be concluded in 12-18 months.

Both Hulu+ Live TV and Fubo are streaming services that mimic a traditional cable TV package that offers linear TV networks. The streaming services have a combined 6.2 million subscribers.

After the deal, both services will still be available to consumers separately. Hulu+ Live TV can be streamed through the Hulu app as part of the Disney bundle, which also includes Hulu, Disney+ and ESPN+.

The deal does not include Hulu, a streamer known for creating original content such as “Crimes Only in the Building” and “The Handmaid’s Tale,” which competes with platforms like Netflix.

“We are now stewards of an iconic brand associated with Hulu,” Fubo co-founder and CEO David Gandler said on Monday’s call with investors. He added that Hulu+ Live TV’s embedded location in the Hulu ecosystem adds value through user retention.

“Having two separate platforms today is obviously not ideal,” Gandler said on the call. “We believe there are synergies in the background… But right now we really want to give consumers a choice.”

Gandler noted that while Fubo has long focused on offering sports and news, Hulu+ Live TV is also known for its entertainment offerings.

Gandler said on Monday’s call that Fubo is expected to be immediately cash flow positive after the deal closes, “immediately making Fubo a major player in the broadcast space.”

Fubo stock, which closed Friday at just $1.44 a share, jumped 190% in Monday morning trading.

Specifically, under the agreement, Fubo and Disney settled litigation involving Disney, Fox and the proposed sports streaming service Venu. Warner Bros. Discovery.

Fubo had filed a lawsuit against Disney, Fox and WBD alleging the service would be anti-competitive, and last year a US judge temporarily blocked Activation of Venu.

When the Disney-Fubo deal was signed, Disney, Fox and Warner Bros. Together, Discovery will pay Fubo $220 million in cash. Disney will provide an additional $145 million term loan to Fubo in 2026. If the deal goes through, Fubo will receive a $130 million termination fee.

The combined company will be led by Fubo’s management team, including Gandler, while the majority of its new board of directors will be appointed by Disney.

Bloomberg informed On Monday, a deal to combine live TV streaming services was imminent.

Before merging with Hulu+ Live TV, Fubo had 1.6 million subscribers in North America and competes with other similar bundle platforms. Google’s YouTube TV.

However, Fubo has long focused its package on providing sports and news content. It is one of the last to offer a variety of regional sports networks, channels that host most of the games of professional local teams, and often. to call high fees from distributors.

As a result, there is Fubo fell AMC Networks channels, as well as Warner Bros. Entertainment-oriented channels from Discovery’s bundles including TV networks.

Fubo executives said Monday that the breadth of the new combined company would give it greater leverage in carriage negotiations with other chains.

As part of the merger, the companies also announced Monday that Fubo and Disney have entered into a new carriage agreement that will allow Fubo to create a new sports and streaming service featuring Disney networks. During the investor call, Fubo said it also reached a new deal with Fox.

Fubo’s focus on sports has brought Disney, Warner Bros. Discovery and Fox’s joint venture was at the heart of the lawsuit against Venu, the sports streaming service.

Scheduled to launch in time for the start of the NFL season in September, Venu was supposed to be a complete offering of sports networks and content from the three media companies that came together to create it. It would apply value $42.99 per month reflects the high cost of sports in a TV package and helps prevent violations of carriage contracts.

The judge in the case noted that Disney, Fox and WBD together control about 54% of all US sports media rights and at least 60% of all national sports rights broadcast in the US.

Fubo had claimed in its lawsuit that Venu was anti-competitive and would boost its business. It was a major victory for Fubo when a judge temporarily blocked Venu’s release in August. The trio of media companies filed an appeal against the court decision.

Although no plans were announced on Monday, the solution could move ahead with the launch of Venu.

Disney, meanwhile, has a lot of irons in the fire when it comes to ESPN streaming options. ESPN plans to do this in addition to its current app, ESPN+ and Venue to turn on flagship direct-to-consumer streaming program later this year.

— CNBC’s Alex Sherman contributed to this article.

Disclosure: Comcast, which owns CNBC parent NBCUniversal, co-owns Hulu.