A move that has looked inevitable for some time is now complete, as Disney has purchased a stake in BamTech, a streaming company launched by Major League Baseball.
For the last several weeks, news reports have indicated that such as move was likely, as MLB looked to separate BamTech from MLB Advanced Media (MLBAM). Disney will be adding BamTech to its streaming portfolio by purchasing 1/3 of the company. Based on a $3 billion valuation, Disney is paying $1 billion in two installments, the second of which will be due in January 2017. As part of the agreement, Disney has the option to purchase majority ownership of BamTech in the future.
BamTech is now slated to work with Disney on a streaming service for one of its most prominent holdings, ESPN. “Bringing a multi-sport service directly to fans is an exciting opportunity that capitalizes on BAMTech’s premier digital distribution platform and continues ESPN’s heritage of embracing technology to create new ways to connect fans with sports,” said John Skipper, ESPN President and Co-Chair, Disney Media Networks, in a press statement. “As WatchESPN continues to grow and add value to the multichannel video subscription, this new service will be an outstanding complement.”
When reading remarks from Disney chief executive Robert A. Iger, the move itself seems to represent a delicate balancing act for ESPN. The network does not want to run the risk of having a new streaming endeavor override the prominence of its cable channels, but at the same time, consumer trends more or less dictate that the endeavor of increasing streaming options should be undertaken by networks. More from the New York Times:
Current content on ESPN’s roster of cable networks will not appear. Perhaps with an eye toward Disney’s cable-provider partners, Mr. Iger was careful to say that the service would be “complementary” to ESPN’s traditional networks. Keeping those channels healthy is “our top priority,” he added.
Mr. Iger declined to say how much subscriptions to the new ESPN service would cost, except to say that Disney planned to use a “dynamic” model, with viewers able to pay based on how much they watch.
Disney, like other media conglomerates, has long relied on steadily climbing cable subscriber fees as an engine. But cable networks have been losing viewers to online media, which has slowed growth, and Wall Street has responded unfavorably.
This marks another win for MLB for the streaming front, as the service has previously caught attention outside the sport’s world for its role in developing HBO GO. Disney will now have to bank on the service providing a platform that modernizes and expands ESPN’s reach to viewers.