Disney acquires majority ownership of BAMTech, will launch new streaming service in early 2018

The Walt Disney Co. has agreed to acquire majority ownership of BAMTech and will launch its ESPN-branded multisport video-streaming service in early 2018, followed by a new Disney-branded direct-to-consumer streaming service in 2019.

Under terms of the transaction, Disney will pay $1.58 billion to acquire an additional 42% stake in BAMTech from MLB Advanced Media (MLBAM). Disney previously acquired a 33% stake in the streaming-technology provider under an agreement that included an option to acquire a majority stake over several years. Today’s announcement marks an acceleration of that timetable for controlling ownership.

The ESPN-branded multisport service will offer a robust array of sports programming, featuring approximately 10,000 live regional, national, and international games and events a year, including Major League Baseball, National Hockey League, Major League Soccer, Grand Slam tennis, and college sports. Individual-sport packages will also be available for purchase, including MLB.TV, NHL.TV, and MLS Live.

The new service will be accessed through an enhanced version of the current ESPN app. In addition to the multisport service, the ESPN app will offer the news, highlights, and scores that fans enjoy today. Pay-TV subscribers will also be able to access the ESPN television networks in the same app on an authenticated basis. For many sports fans, this app will become the premier digital destination for all their sports content.

“The media landscape is increasingly defined by direct relationships between content creators and consumers, and our control of BAMTech’s full array of innovative technology will give us the power to forge those connections, along with the flexibility to quickly adapt to shifts in the market,” says Disney Chairman/CEO Robert A. Iger. “This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the company, one that takes advantage of the incredible opportunity that changing technology provides us to leverage the strength of our great brands.”

The new Disney-branded service will become the exclusive home in the U.S. for subscription video-on-demand viewing of the newest live-action and animated movies from Disney and Pixar, beginning with the 2019 theatrical slate, which includes Toy Story 4, the sequel to Frozen, and The Lion King from Disney live-action, along with other highly anticipated movies. Disney will also make a significant investment in an annual slate of original movies, TV shows, short-form content, and other Disney-branded exclusives for the service. Additionally, the service will feature a vast collection of library content, including Disney and Pixar movies and Disney Channel, Disney Junior, and Disney XD television programming.

With this strategic shift, Disney will end its distribution agreement with Netflix for subscription streaming of new releases, beginning with the 2019 calendar-year theatrical slate.

Plans are for the streaming services to be available for purchase directly from Disney and ESPN, in app stores, and from authorized MVPDs.

“We’re very proud of the content-distribution innovations driven by MLBAM and BAMTech over the past 15 years,” says MLB Commissioner Robert D. Manfred Jr. “Major League Baseball will continue to work with Disney and ESPN to further grow BAMTech as it breaks new ground in technologies for consumers to access entertainment and sports programming.”

Says BAMTech CEO Michael Paull, “This is an exciting validation of our team, its achievements, and the customer-centric platform it’s built. Yet we’ve merely scratched the surface of what can be accomplished in a future where we combine Disney and ESPN’s world-class IP and our proprietary direct-to-consumer ecosystem.”

The BAMTech acquisition is subject to regulatory approval, and, after it is closed, Iger will serve as chairman of the BAMTech board. MLBAM and NHL will continue as minority stakeholders in BAMTech, with seats on the board. Paull will report to Kevin A. Mayer, senior EVP/chief strategy officer, The Walt Disney Co. John Skipper, ESPN president/co-chairman, Disney Media Networks, will manage the new ESPN-branded service.

The BAMTech deal is expected to be modestly dilutive to Disney’s earnings per share for two years. Additional dilution as the company implements its direct-to-consumer strategy will be dependent on the company’s licensing approach and the level of investment in original programming.