In a separate transaction, Disney announced that it was acquiring a 33% stake in video streaming and technology services company BAMTech that was formed by Major League Baseball.
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As part of the new deal BAMTech will collaborate with ESPN to launch and distribute a new ESPN-branded multi-sport subscription streaming service.
“The goal is not to take product off ESPN’s current channels, but to use sports and product that ESPN has already licensed that’s not appearing on the channels”, Disney chief executive Bob Iger said.
Iger suggested the stake in BAMTech will also help “jumpstart” many of its business lines and not just ESPN into a space that is “exciting” as well as being “important and dynamic”. The movie division increased 39.6 percent to $2.85 billion in the quarter.
Media behemoth – The Walt Disney Company (DIS – Analyst Report) – reported better-than-expected earnings and revenues in third-quarter fiscal 2016 after missing in the previous quarter.
Investors are keeping an eye on the cable TV unit’s results.
Disney posted earnings of $1.62 a share, beating estimates of $1.61.
Revenue was up by 9% ending the quarter at $14.27 billion.
As per sources, value of the deal stands at $1 billion. The company serves 7.5 million paid subscribers.
“Our investment in BAMTech gives us the technology infrastructure we need to quickly scale and monetize our streaming capabilities at ESPN and across our company”, Iger said. The performance of its sports network, ESPN has been keenly watched as subscription growth has struggled with more and more consumers “cutting the cord” and abandoning costly TV subscriptions and scheduled programming.
The quarter also marked a tumultuous one for the company’s theme parks. In June, Disney opened its $5.5 billion Shanghai Disney Resort, the company’s largest foreign investment.
The Studio Entertainment group also experienced a whopping 62% hike in operating income during Q3, benefiting from having five significant release titles during the period-including Captain America: Civil War, The Jungle Book, Finding Dory and Alice Through the Looking Glass-compared to four in the prior-year quarter.
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Earlier Tuesday, Euro Disney SCA, the company’s resort in France, reported a 9.2 percent drop in quarterly revenue, citing security concerns in Brussels and Paris, strikes and poor weather.
