Jan. 6 (UPI) -- Disney announced Monday it will bundle its Hulu+ Live TV with Fubo streaming services.
The surprise deal, first reported by Bloomberg, would put Hulu+ Live TV second behind YouTube TV's approximately 8 million subscribers and may also settle Fubo's ongoing lawsuit with the sports streaming service Venu, Bloomberg .
It's expected that Disney will be a 70% majority owner of Fubo with company shareholders owning the remaining 30%.
With a combined 6.2 million subscribers, the two services will still be separately available under its own brand if the deal is finalized which could take as long as a year and a half.
Disney, Fox and Warner Bros. Discovery are to make a $220 million cash payment to Fubo with Disney obligated to commit a $145 million term loan to Fubu in 2026 by the time a new Disney CEO is revealed. But Fubo will get a $130 million termination fee if the deal otherwise fails.
"At deal close, our company is expected to become immediately cash flow positive, instantly making Fubo the major player in the streaming space," Fubo co-founder and CEO David Gandler said Monday on an investor call.
Meanwhile, stock in Fubo surged to 170% at one point in early Monday trading after it closed at $1.44 per share on Friday.
The merged streaming company will be led by Fubo management including Gandler with a new Disney-appointed board of directors.
Disney and Fubo also will enter into a new agreement that allows Fubo to create a new sports broadcasting service that highlights Disney networks.
It will allow Fubo to deliver "flexible, innovative and competitive content packages to consumers, particularly around sports," according to Gandler.
The merger deal arrived as Disney preps for the departure of longtime CEO Bob Iger next year and new leadership on its board of directors this month after it was reported in August that Disney's combined streaming services have become profitable for the first time.
Recently, DirecTV resumed programming from Disney, including ESPN and ABC, after the two sides agreed to a new deal less than two weeks after service was halted to the satellite TV provider that affected Disney+, Hulu and ESPN+ streaming services.
Meanwhile, an ex-Disney executive and former president of ABC Television says this new merger mirrors other past deals.
"All I can say is that it is a classic imaginative Bob Iger deal in the tradition of his Pixar and Marvel acquisitions," Preston Padden, former executive vice president of government relations for the Walt Disney Company, told UPI on Monday.
