Disney Hulu+ Live TV and Fubo to combine

disney will combine its Hulu+ Live TV service with fubomerging two Internet TV packages, the companies announced Monday.

Disney will become the majority owner of the resulting company, the publicly traded company Fubo, with a 70% stake. Fubo shareholders will own the remaining 30% of the company. The deal is expected to close in 12 to 18 months.

Both Hulu+ Live TV and Fubo are streaming services that mimic the traditional cable TV package and offer linear TV networks. Together, the streaming services have 6.2 million subscribers.

Both services will continue to be available separately to consumers once the deal closes. Hulu+ Live TV can be streamed through the Hulu app, as well as part of the Disney bundle that also includes Hulu, Disney+, and ESPN+.

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

“We are now stewards of an iconic brand with respect to Hulu,” Fubo co-founder and CEO David Gandler said during a call with investors on Monday. He added that Hulu+ Live TV’s place integrated within the Hulu ecosystem adds value through user retention.

“Obviously having two separate platforms today is not ideal,” Gandler said during the call. “We think there are synergies on the backend… But right now we really want to give consumers options.”

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

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

Fubo stock, which closed Friday at just $1.44 per share, rose 250% on Monday.

Notably, under the agreement, Fubo and Disney resolved litigation related to Venu, the sports streaming service proposed by Disney, Fox and 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 the launch of Venu.

When the agreement between Disney and Fubo is signed, Disney, Fox and Warner Bros. Discovery will together make a cash payment of $220 million to Fubo. Disney will also commit a $145 million term loan to Fubo in 2026. If the deal falls through, Fubo would receive a $130 million termination fee.

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

Bloomberg reported earlier on Monday that a deal to merge the live TV streaming services was imminent.

Fubo had 1.6 million subscribers in North America before the combination with Hulu+ Live TV and competes with other similar bundled platforms such as from google YouTube television.

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

As a result, Fubo has removed entertainment-focused channels from its packages, including AMC Networks channels as well as Warner Bros. Discovery television networks.

Fubo executives said Monday that the breadth of the newly combined company will give it more leverage in transportation discussions with other networks.

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

Fubo’s focus on sports was the main driver of its lawsuit against Disney, Warner Bros. Discovery and Fox’s joint venture sports streaming service, Venu.

Venu, scheduled to launch at the start of the NFL season in September, was to be a complete offering of sports networks and content from the three media companies that had come together to create it. The app would have cost $42.99 a month, which would show the high cost of sports in the television package and help avoid any disruption to transportation agreements.

The judge in the case noted that Disney, Fox and WBD together control about 54% of all U.S. sports media rights and at least 60% of all nationally broadcast sports rights in the United States.

Fubo had alleged in its lawsuit that Venu was anti-competitive and would hurt its business. When the judge temporarily blocked Venu from launching in August, it was a big victory for Fubo. The trio of media companies appealed the court ruling.

With the deal, Venu can move forward with its launch, although no plans were announced Monday.

Meanwhile, Disney has several issues at play when it comes to ESPN streaming options. In addition to its current app, ESPN+ and Venu, ESPN plans to launch a flagship direct-to-consumer streaming app later this year.

—CNBC’s Alex Sherman contributed to this article.

Disclosure: Comcast, which owns NBCUniversal, parent of CNBC, is a co-owner of Hulu.