(Bloomberg) — Walt Disney Co. agreed to merge its Hulu + Live TV streaming service with the net sports-focused company FuboTV Inc., creating the second-biggest digital pay-TV provider.
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Under the transaction, Disney will fold Hulu + Live TV business into Fubo, making a recent enterprise that will probably be 70% owned by Disney and the remaining by Fubo, Disney said in an announcement on Monday, confirming an earlier Bloomberg report. With a combined 6.2 million subscribers in North America, the brand new enterprise will trail only YouTube TV.
The deal doesn’t include Hulu’s subscription video business, wherein customers pay a fee to stream a catalog of content at their leisure. The TV enterprise will proceed to operate under two brands: Fubo and Hulu + Live TV.
Fubo co-founder and Chief Executive Officer David Gandler will operate the newly combined Fubo and Hulu+ Live TV business.
“This mix enables us to deliver on our promise to supply consumers with greater selection and suppleness,” Gandler said within the statement. “Moreover, this agreement allows us to scale effectively, strengthens Fubo’s balance sheet and positions us for positive money flow. It’s a win for consumers, our shareholders, and your complete streaming industry.”
Shares of Fubo greater than tripled on Monday to as high as $4.99, the largest jump since January 2018. Disney gained as much as 1.5%. Fubo, which had a market value of about $481 million on Friday, will remain publicly traded. Because the smallest virtual TV operator, it has faced challenges including expensive programming and subscriber churn.
Fubo is a virtual multichannel video programming distributor, which suggests it offers live TV channels over the web versus over cable, satellite or fiber. Hulu’s Live service, a substitute for cable TV, lets users stream from roughly 100 live TV channels including sports, news and shows.
Combining the services should position the enterprise to draw subscribers as customers search for online alternatives to cable TV.
In reference to the transaction, Disney will enter right into a recent carriage agreement with Fubo that can allow Fubo to create a recent sports and broadcast service, featuring Disney’s sports and broadcast networks, including ABC and ESPN. Fubo also has the potential to create skinnier sports news and entertainment bundles in keeping with consumers’ taste, executives said on a call Monday announcing the deal.