On Aug. 9, The Walt Disney Co. confirmed that it has bought a 33 percent stake in BAMTech for $1 billion, which will be paid in two installments: one now and the other in January 2017. 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.
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BAMTech will take over the day-to-day streaming for Disney properties including the ABC Television Group and ESPN. BAMTech has nearly 7.5 million paid subscribers and “will provide capital to accelerate growth of its proprietary video-delivery platform, deliver greater flexibility to clients and develop new technologies and capabilities”, Disney said. MLB Commissioner Robert Manfred Jr. acknowledged the importance of streaming content for the league, and Disney, the owner of sports network ESPN, said details of the new service will be announced in future months.
Founded in 2000, BamTech grew out the MLB’s interactive media and internet company known as MLBam.
“Our goal is to ensure that our brands, notably ESPN, remain strong, vital and relevant in a totally changed media landscape”, added Iger. The SVOD will feature content provided by both BamTech and ESPN, and include live regional, national and global sporting events.
“This is a whole new world where distributors are going into the content space and content owners are going into the distribution space”, Disney Chief Executive Officer Bob Iger said in an interview on Bloomberg TV.
On the company’s financial health, Walt Disney Co reported $1.62 EPS for the quarter, beating the analyst consensus estimate by $ 0.01 according to the earnings call on Aug 9, 2016.
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Disney believes that an early investment with BAM Tech will open up the doors for a majority stake further down the road, further showing how serious the company is when it comes to entering the streaming game. The movie division increased 39.6 percent to $2.85 billion in the quarter. The upside was primarily driven by 62% and 8% increase in operating income from Studio Entertainment and Parks and Resorts, respectively. Higher TV programming costs and subscriber losses countered rising advertising and affiliate fees in the cable division, the company said. Analysts were expecting revenue of over $14.15 billion with per share earnings of $1.61.
