Disney Invests $1B in MLB’s Streaming Biz, Plans for ESPN Streaming Service

espnAccording to a press release, The Walt Disney Company, owners of ESPN among many other TV/media properties, has acquired a 33% stake in BAM Tech. BAM Tech was separated from MLB Advanced Media (MLBAM) as part of the deal. MLBAM is the brain behind MLB.TV, one of the internet’s first subscription streaming services, and, more recently, HBO Now, the WWE Network, and the NHL’s online video service.

While Disney will partner with BAM Tech for streaming initiatives with Disney, ABC Television Group, and ESPN, the press release discloses a plan to launch a new ESPN-branded multi-sport subscription streaming service. This is said to be over-the-top (OTT) and separate/in addition to the current ESPN channels. Disney states, that the “direct-to-consumer service will feature content provided by both BAMTech and ESPN, and include live regional, national and international sporting events.” This seems to indicate that the current WatchESPN streaming will remain the same, at least with regards to the streamed mirrors of the cable channels.

Business Insider reports that the ESPN streaming service will probably begin by the end of the year as ESPN is feeling the effects of the ‘cord-cutters’:  “As of the end of 2015, ESPN had lost about 7 million subscribers in the previous two years. That means ESPN left an estimated $1.3 billion in subscriber revenue on the table in 2015, compared with what it would have made with steady cable company growth.”

Disney’s CEO Bob Iger appeared on CNBC‘s “Closing Bell,” saying “We love the business model. We think that in today’s world having the ability to stream on a scaled basis, live sports and live programming is a competitive advantage and something that is necessary.”

Mr. Iger said, on an earnings call, that the OTT service will have college sports, including football and basketball, as well as tennis, rugby and cricket. This hints at streaming games and matches that, while maybe not popular enough to broadcast widely, will have a loyal audience willing to subscribe and/or sit through advertisements (like dodgeball on ESPN8, the Ocho).

Disney will own 33% (BAM Tech valued at $3B) paid in two installments before January 2017, with an option to buy a majority stake in the near future. The NHL acquires a minority stake of BAM Tech as part of the spin-out. MLBAM was previously owned by professional baseball’s 30 teams.

MLBAM powers Sony’s PlayStation Vue internet TV service. Disney, of course, is an owner of Hulu, along with Fox and NBCUniversal.

Last August, Time Warner Cable bought a majority stake iStreamPlanet, an MLBAM competitor, for $200 million at auction. According to the Hollywood Reporter, TWC’s streaming assets were attractive when, last Wednesday, Hulu “agreed to sell a 10 percent stake in its business to Time Warner in a $583 million deal” (valued at $5.8B).  Hulu just shut down the free streaming service in an apparent preparation for the cable-alternative service and inked a deal with Yahoo! to host some ad-supported content in a Tumblr-like community called Yahoo View. Verizon bought Yahoo last month.

Re/code first reported Disney’s interest in MLBAM’s streaming unit in April.