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The Walt Disney Company announced that it has agreed to purchase the majority stake in BAMTech, the digital media company spun off from MLB Advanced Media.
Disney had already purchased a 33% stake in BAMTech, in two installments totaling $1 billion, and under that agreement it had an option to acquire a majority stake over several years. Disney will now acquire an additional 42% stake, for $1.58 billion. Major League Baseball and its 30 team owners will retain 15% of the company, with other partners such as the NHL retaining minority interests.
The transaction is still subject to regulatory approval, and none of the additional money will begin moving to MLB until that time. Sources would not indicate whether there would be multiple installments involved, as was the case with Disney’s initial investment in BAMTech.
The move will lead to executive restructuring at BAMTech as well.
Upon the deal's closing, Bob Iger will serve as chairman of the BAMTech board. MLBAM and the NHL, as minority stakeholders, will have seats on the board. Michael Paull, BAMTech's chief executive, will report to Kevin A. Mayer, senior executive vice president and chief strategy officer for Disney.
Disney accelerated its plans in the wake of continued subscriber declines for ESPN and Comcast's $3.8 billion purchase of Dreamworks last year. In addition, Disney said an ESPN-branded multi-sport video-streaming service would be released in early 2018 , followed by a new Disney-branded direct-to-consumer streaming service in 2019.
John Skipper, president of ESPN and co-chairman of Disney Media Networks, will manage the new ESPN-branded service.
“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,” Iger, the chairman and chief executive of Disney, said in a statement. “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 streaming service with ESPN will cover about 10,000 live regional, national and international events, including Grand Slam tennis and events for Major League Baseball, the NHL, Major League Soccer and college sports. The new content will be streamed through an enhanced version of the current ESPN app. While the product will have media properties covered by MLBAM, Disney noted that individual sport packages would also be available for purchase, including MLB.TV, NHL.TV and MLS Live.
TV subscribers will also be able to access the ESPN networks in the same app on an authenticated basis.
Disney will end its agreement with Netflix and begin going direct-to-customer with new releases, beginning with the 2019 theatrical slate . The first releases through the new Disney app that will be available on app stores will be Toy Story 4, the sequel to Frozen and the coming live-action version of The Lion King.
The company's other investments in digital streaming through BAMTech will include TV shows, short-form content and other Disney-branded exclusives. 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.
“This is an exciting validation of our team, its achievements and the customer-centric platform it’s built,” Paull said. “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 transaction improves MLB’s already robust bottom line. Last year, baseball's gross revenue approached $10 billion, and it could hit $11 billion this year. Needless to say, MLB's top executive was pleased with today’s announcement.
“We’re very proud of the content distribution innovations driven by MLBAM and BAMTech over the past 15 years,” Commissioner Rob Manfred said. “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.”
