Webcaster JumpTV has struck a deal to merge with rival U.S. online sports and cultural programming provider NeuLion.

The goal is to create a U.S.-based Internet protocol TV (IPTV) giant.

As part of the deal, JumpTV will issue 49.5 million shares worth around $40 million — or virtually all issued and outstanding shares of the Canadian webcaster — to the privately held NeuLion, which is controlled by Charles Wang, the founder and former CEO of Computer Associates and a major player in the 1990s dot-com boom.

JumpTV founder and executive chair Scott Paterson and Wang are also taking personal stakes in the New York-based 50-50 venture, which aims to exploit Internet video technology to market a host of web-based sports, religious and international programming.

‘The combination of our highly complementary technologies and depth of expertise in the areas of sports and international IPTV delivery makes for incredible synergy between the two companies,’ says Paterson.

‘This merger enables us to provide our partners with a complete solution for streaming content live online across multiple devices and viewing platforms,’ he adds.

Shares in JumpTV debuted at around $10 in 2006 as the webcaster expanded with an offering of international ethnic TV channels online, but have fallen sharply in the last year as the company restructured.

Paterson, who was replaced as CEO last October, is to serve as executive vice-chairman of the newly combined JumpTV-NeuLion entity.

Wang will serve as chairman, while his wife, Nancy Li, becomes CEO.

JumpTV CEO Jordan Banks is to remain with the webcaster through the transition. Paterson and Wang first met and eventually negotiated their merger as Banks restructured the company beginning in October 2007.

The transaction is expected to close in October, subject to shareholder and regulatory approval. Stock in JumpTV/NeuLion will be listed on the Toronto Stock Exchange, and an application to trade on London’s AIM market will be made.