Disney said on Monday it will merge its Hulu + Live TV business with rival FuboTV — a deal that potentially paves the way for the launch of its stalled sports broadcasting venture with Fox Corp and Warner Bros Discovery.
The combined company will create the second largest online pay TV provider in North America, behind YouTube TV, with approximately $6 billion in revenue and 6.2 million subscribers.
Disney will hold a 70% majority stake in the venture, which will be led by Fubo CEO and co-founder David Gandler.
As part of the deal, Fubo will drop a lawsuit against Disney and ESPN led by Bob Iger over Venu, the sports package that was supposed to launch last fall.
“This combination enables us to deliver on our promise to offer consumers greater choice and flexibility,” Gandler said of the merger.
“In addition, this deal allows us to scale effectively, strengthens Fubo’s balance sheet and positions us for positive cash flows. It’s a win for consumers, our shareholders and the entire broadcast industry.”
The deal does not include streamer Hulu, home of original series such as “Only Murders in the Building” and “The Handmaid’s Tale,” which competes with platforms such as Netflix, Amazon Prime Video and Apple.
However, the combination of Fubo and Hulu + Live TV will give customers the ability to stream a wide range of live broadcasts and cable networks on their connected TVs, mobile phones, tablets and other Internet-connected devices.
Fubo and Hulu + Live TV will continue to be available to consumers as separate offerings after the merger, the companies said.
Hulu + Live TV will continue to stream on the Hulu app and will be offered as part of a bundle with Hulu, Disney+ and ESPN+. Fubo, which broadcasts more than 55,000 live sports events every year, will continue to serve its subscribers on the Fubo app.
The deal ends a bitter legal battle that had blocked Disney, Fox and Warner Bros. Discovery by launching its own sports-focused streaming provider.
In February, Fubo had sued the media giants, saying Venu would violate US antitrust law by reducing competition and raising prices.
A district court judge found that Fubo is likely to succeed in its antitrust claims and issued the order temporarily halting Venu’s launch.
The companies will ask the judge to reverse the decision, after the legal settlement.
As part of the transaction, Discovery will make a lump sum cash payment to Fubo of $220 million, and Disney has committed to a $145 million term loan to Fubo in 2026, the companies said.
Shares of Fubo, which had a market value of about $480 million at the last close, rose nearly 141% to $3.46 in early trading. Disney stepped up a bit.
Fubo shares fell more than 60% in 2024 as the company’s revenue growth slowed and competition intensified from larger rivals.
As part of Monday’s announcement, Disney will also enter into a new carriage agreement with Fubo that will allow Fubo to create a new sports service featuring Disney’s sports and broadcast networks including ABC, ESPN, as well as ESPN+ .
The deal includes a $130 million termination fee.
“This combination will allow Hulu + Live TV and Fubo to enhance and expand their virtual MVPD offerings and provide consumers with even more choice and flexibility,” said Justin Warbrooke, Disney’s executive vice president and head of corporate development.
“We have confidence in Fubo’s management team and their ability to grow the business, delivering high-quality offerings that serve subscribers with the content they want and delivering great value,” he added.
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