Disney buys into baseball’s stream team
LOS ANGELES — The Walt Disney Co., facing stiff challenges in the traditional television business, is making a $1 billion bet on video streaming.
After months of speculation, Disney said Tuesday that it had concluded a deal to spend that amount for a 33 percent stake in BamTech, Major League Baseball’s fast-growing streaming division. As part of the agreement, Disney has the option to buy a controlling interest in BamTech in the coming years.
BamTech, which handles streaming for baseball teams and Time Warner’s HBO, among others, will work with Disney to introduce an ESPN-branded subscription streaming service, Disney said.
The unnamed service will include live regional, national and international sporting events.
But current content on ESPN’s roster of cable networks will not appear, Disney said. No further details were given.
“Our investment in Bam Tech gives us the technology infrastructure we need to quickly scale and monetize our streaming capabilities at ESPN and across our company,” Rob ert Iger, Disney’s chief ex- ecutive, said in a statement.
The purchase is important for Disney for two reasons.
First, it offers near-term growth. Disney, like other media conglomerates, has long relied on steadily climbing cable subscriber fees as an engine. Disney’s cable holdings include ESPN, the Disney Channel and A&E Networks. But those networks, which make up 50 percent of Disney’s annual profit, have been losing viewers to online media, and Wall Street has responded unfavorably.
Disney said separately Tuesday that operating profit for its vast cable division totaled $2.37 billion in the most recent quarter, essentially flat from a year earlier.
In addition, Disney most likely sees the acquisition — its largest since the 2012 purchase of Lucasfilm for $4.4 billion — as furthering its interest in building a Netflix-style streaming service.
The company has repeatedly said it is not ready to introduce a broad direct-to-consumer service in the United States. But Disney has been experimenting overseas with DisneyLife, which streams Disney branded movies and shows for a monthly fee.
Iger described DisneyLife as an “experiment” on the company’s previous earnings conference call.
The service was introduced in Europe late last year and also offers ebooks, music and games. In particular, Iger said, Disney hoped to use DisneyLife to learn “whether the technology platform that we created for it would work.”
Disney has more sources of growth than most of its media competitors. In mid-June, the company opened the $5.5 billion Shanghai Disney Resort, which is designed to stoke demand for Disney products in China.
Disney is also pouring hundreds of millions of dollars into new park attractions in Florida and California.