The Walt Disney Company confirmed today that it will spend $1 billion for a 33 percent stake in OTT streaming shop BAMTech, which will be spun off from Major League Baseball Advanced Media as part of the transaction.
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The two-part US$1 billion investment, which includes an option for Disney to become a majority stakeholder, provides what Macquarie analyst Tim Nollen considers a “commanding position” on future content ownership. The offering will include live regional, national and worldwide sporting events – but it will not include content from ESPN’s TV channels.
Iger said Disney plans to release the new ESPN streaming service this year. The deal will also support streaming video and digital products from ABC and Disney, and future digital initiatives.
The money will be used to accelerate BAMTech’s video service platform, which already serves 7.5 million paying subscribers at various clients.
The subscriber losses come amid the rise of cord-cutting and cord-shaving, a phenomenon that spooked Disney investors roughly one year ago, when CEO Bob Iger said ESPN had experienced “some subscriber losses”.
The investment management firm now holds a total of 16,584 shares of Walt Disney Co which is valued at $1,593,557.Walt Disney Co makes up approximately 0.18% of Ifc Holdings Incorporatedfl’s portfolio.
The net income attributable to the company rose to $US2.6 billion, or $US1.59 per share, in the third quarter, from $US2.48 billion, or $US1.45 per share, a year earlier.
Disney has said in the past that rolling out an aggressive streaming strategy would be premature, it is keeping faith in the cable TV market, for now at least.
Disney has managed to deliver 12 consecutive quarters of double-digit EPS growth.
Disney is breaking into the subscription streaming service world with the launch of an ESPN-branded “multi-sport” offering. That topped the $1.61 a share average of analysts’ estimates compiled by Bloomberg.
Disney revealed that the company’s theme park and movie division surpassed Wall Street expectations. And while ESPN remains valuable to advertisers, who are desperate to air commercials people will watch live, fees from cable companies that carry ESPN and the rest of Disney’s cable lineup are challenged by declining subscriber numbers.
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While this was a generally solid report, Disney shares fell on the news that ad revenues fell for ESPN. Operating income at the studio rose 62 percent to $766 million. Disney had strong box office results with “Finding Dory”, “Captain America: Civil War”, “The Jungle Book” and “Zootopia”.
