Disney announced on Monday that it will merge its Hulu+ Live TV with Fubo to create two Internet TV bundles.

Disney will own 70% of the publicly listed Fubo Company, the resultant company. Fubo shareholders own the remaining 30 percent of the company. The deal should close within 12-18 months.

Hulu+ Live TV, as well as Fubo, are both streaming services that offer linear TV channels. They mimic the traditional cable TV bundle. The streaming services together have 6.2 million subscribers.

After the closing of the deal, both services will be available to consumers separately. Hulu+ Live TV is available through the Hulu App and as part of Disney’s bundle, which includes Hulu as well as Disney+, and ESPN+.

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

.David Gandler, co-founder of Fubo and CEO during a call with investors on Monday, said: “We now are stewards for an iconic brand in respect to Hulu.” He said that Hulu+ Live TV being embedded within the Hulu ecosystem added value in terms of user retention.

“Having two platforms is not ideal,” Gandler stated during the conference call. “We think there are synergies at the backend.… But at this moment, we want to give consumers a choice.”

Gandler pointed out that Hulu+ Live TV, which is also known as Fubo, entertains in addition to sports and news.

Gandler stated on the Monday call that Fubo will become cash-flow positive immediately following the close of the deal. “This instantly makes Fubo the leading player in the streaming market,” he said.

Fubo shares, which closed on Friday at only $1.44 per share and surged 190% Monday morning in trading.

In the agreement, Fubo, Disney, and Fox have settled a lawsuit regarding Venu, a proposed streaming sports service from Disney and Warner Bros. Discovery.

Fubo filed a lawsuit against Disney Fox and WBD, alleging that the service would be uncompetitive. Last year, a U.S. court temporarily blocked the launch of Venu.

Disney, Fox, and Warner Bros. will sign the Disney-Fubo agreement. Discovery and Fubo will pay $220 million in cash. Disney will also commit to a term loan of $145 million in 2026. Fubo will receive $130 million in termination fees if the deal falls through.

Disney will appoint the majority of its new board members, including Gandler. The management team from Fubo will continue to lead the combined company.

Bloomberg reported on Monday that a merger of live TV streaming services would be imminent.

Sports Focus

Fubo has 1.6 million North American subscribers before the merger with Hulu+ Live TV. It competes with similar bundle platforms such as Google’s YouTube TV.

Fubo’s bundle has focused on sports and news for a long time. It’s one of the few to offer regional sports channels, which are the ones that broadcast the majority of local professional teams’ games. These channels often command high fees from distributors.

As a result, Fubo has dropped entertainment-focused channels from its bundles including AMC Networks’ channels, as well as Warner Bros. Discovery’s TV networks.

Fubo executives stated Monday that the combined size of the company would give it greater leverage in negotiations with other networks.

In conjunction with the merger, both companies announced on Monday that Fubo has entered into a new carriage deal that allows Fubo to create a sports and broadcasting service featuring Disney’s channels. Fubo announced a new deal with Fox during the investor call.

Fubo’s focus on sports was the primary reason for its lawsuit against Disney and Warner Bros. Venu, the joint venture between Discovery and Fox to provide sports streaming services.

Venu was supposed to launch just in time for September’s NFL season. It would have included all the sports channels and content that the three media companies who created it had to offer. The app was to cost $42.99 per month. This would show the high price of sports included in TV packages and help avoid any disruption of carriage agreements.

The judge in the case stated that Disney, Fox, and WBD together control approximately 54% of U.S. Sports Media Rights, and at minimum 60% of U.S. National Broadcasting Sports Rights.

In its lawsuit, Fubo claimed that Venu would disrupt its business and be anti-competitive. Fubo scored a major victory when the U.S. court temporarily stopped the launch of Venu last August. The three media companies appealed against the court’s ruling.

Venu’s launch can now proceed, even though no plans were made public on Monday.

Disney has a number of options for ESPN streaming. ESPN will launch its flagship streaming app this year, in addition to Venu and ESPN+.