Fubo TV stock skyrockets on news that Disney will merge it with Hulu’s livestreaming service

The Walt Disney Company may have been experiencing a bit of FOMO when it came to streaming live sports, despite its stable of ESPN networks.

Today, it announced that it will bolster its offerings by combining with another streaming provider, Fubo, which is perhaps best known for its sports streaming options.

The short and sweet of it

Disney’s Hulu + Live TV businesses are combining with Fubo, and Disney will control 70% of the new service. Fubo’s management team will lead the new operation, which will operate under Fubo, and both Fubo and Hulu + Live TV will remain available as separate services to customers.

In effect, Hulu + Live TV and Fubo will have more than 6.2 million customers in North America, and become the second largest live-TV streaming service behind YouTube TV.

The new service will not include access to Hulu’s on-demand library, and will “facilitate an enhanced choice of programming packages and address a variety of consumer preferences at attractive price points,” according to a Disney news release.

Shares of Fubotv Inc (NYSE: FUBO) were up well over 120% in early trading on Monday after the markets opened. The stock had already taken off in premarket trading after Bloomberg reported that the deal was in the works.

The Walt Disney Company (NYSE: DIS) saw its stock rise 1.21% as of this writing.

What does this deal mean?

“This combination will allow both 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, in a statement. “We have confidence in the Fubo management team and their ability to grow the business, delivering high-quality offerings that serve subscribers with the content they want and offering great value.”

Warbrooke’s enthusiasm was echoed by Fubo CEO David Gandler, who said that the agreement “allows us to scale effectively, strengthens Fubo’s balance sheet and positions us for positive cash flow.”

The deal also means that Fubo is dropping litigation and legal claims against Disney and a few others, which were planning to launch a sport-centric streaming service called Venu Sports.

The basis of the lawsuit was that the new service would violate antitrust laws and increase prices for consumers. That, however, has been squashed, and now, Fubo and Disney will create a new sports and broadcast service, which will feature a ton of sports content, including ESPN’s stable of networks.