Dow Jones entertainment giant Walt Disney Company (DIS) and sports streaming provider FuboTV announced a deal Monday to merge certain operations of Disney into Fubo. DIS stock ticked higher early Monday while FUBO stock vaulted.

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According to the deal, Disney will combine its Hulu + Live TV business with Fubo and will own 70% of the combined company. However, the business will operate under publicly traded Fubo (FUBO) and the current Fubo management team, including CEO David Gandler, will continue to lead it.

Fubo and Hulu + Live TV have a combined 6.2 million subscribers in North America, according to Disney. Fubo plans to create a new sports and broadcasting service, which will feature Disney’s networks including ABC, SECN, ACCN, and its various ESPN properties. The companies did not mention an expected launch date or potential pricing plans.

Meanwhile, Hulu + Live TV and Fubo will remain available to customers as separate offerings. Disney’s bundle for Hulu, Disney+ and ESPN+ will also remain available.

Financial details of the transaction were not disclosed in the release. But as part of the deal, Fubo settled all litigation with Disney and ESPN related to Venu Sports, the previously announced streaming platform planned by ESPN, Fox (FOX) and Warner Bros. Discovery (WBD).

Venu Sports was expected to launch in the fall of 2024. But a federal judge in August granted a preliminary injunction to block the launch on antitrust grounds following a lawsuit from FuboTV. Disney, Fox and Warner Bros. are expected to petition the U.S. Court of Appeals on Monday to reverse the ruling, Reuters reported.

In connection with the deal, Disney Fox and Warner Bros. will make an aggregate cash payment to Fubo worth $220 million. Disney also committed to providing a $145 million term loan to Fubo in 2026 as part of the deal.

The transaction also includes a $130 million termination fee payable to Fubo in the event the deal fails to close or the companies are unable to obtain the necessary regulatory approvals. Disney did not include a timeline for when the deal is expected to close.

Disney Stock

DIS stock rose about 1.1% Monday morning on the news.

Disney stock has a 118.63 buy point for a large cup-with-handle base that stretches back to April.

Shares have traded tightly the past three weeks within the handle. Aggressive investors could use Disney’s Dec. 20 high of 116.12 as an early entry opportunity.

FUBO stock soared more than 140% early Monday to trade just below 3.50, its highest level since December 2023.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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