Coverage: Disney buys stake in baseball streaming service

Walt Disney Co. announced Tuesday that it was spending $1 billion to buy a stake in the Major League Baseball streaming service, adding to its ESPN sports business.

Ben Fritz and Shalini Ramachandran of The Wall Street Journal had the news:

One year after its shares began a 12% slide driven by concerns over ESPN’s growth trajectory, Walt Disney Co. has come up with an answer for Wall Street: The media giant said Tuesday it will spend $1 billion to acquire a 33% stake in BAMTech, the streaming media unit created by Major League Baseball.

As part of the deal, ESPN will later this year launch a new digital service, separate from the traditional cable bundle, that will include games the sports network doesn’t air on its linear channels, Disney Chief Executive Robert Iger said on a conference call with analysts to discuss the company’s financial results. The new service will show professional baseball and hockey as well as college football and basketball.

It will include a mix of rights already controlled by ESPN and BAMTech, meaning they will likely be games not popular enough to air on TV. Costs for consumers have not yet been set, but Mr. Iger said they could vary depending on how much people want to watch.

“We view this as a complementary service to what ESPN is providing in the multichannel package,” Mr. Iger said, referring to traditional cable and satellite television programming bundles.

Daniel Miller of the Los Angeles Times writes about the new streaming service that Disney will launch:

On a conference call with analysts, Disney Chief Executive Bob Iger said the company aims to launch the service “probably by the end of the year.”

The offering will include live regional, national and international sporting events, but it will not include content from ESPN’s TV channels. Instead, the service will include content that BAMTech has already licensed from Major League Baseball and the National Hockey League, and other programming that ESPN has the rights to, such as college sports, Iger said.

“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,” Iger said. “And so we view this as a complementary service to what ESPN is already providing.”

Pricing details were not disclosed.

The deal could pave the way for an eventual offering of the complete slate of ESPN content via a streaming service, analysts said.

Brooks Barnes of the New York Times notes how Disney defended its ESPN business:

Mr. Iger has also aggressively defended the health of ESPN, insisting that the sports television behemoth is indispensable to consumers, and will remain so.

But many investors and analysts have remained focused on upheaval in the television business. Viewership via satellite and cable services is declining as streaming options proliferate, and ESPN, the naysayers contend, is particularly exposed to a slowdown because Disney has locked itself into long-term payments for sports rights. Its ability to keep profit intact by cutting programming costs in the near term is limited.

BamTech has been part of MLB Advanced Media, which was founded by Major League Baseball in 2000 to build websites for teams. Since then, MLB Advanced Media, based in a former Manhattan cookie factory, has grown into a company with more than $900 million in annual revenue that powers numerous streaming services. CBS Sports has relied on it for its N.C.A.A. men’s basketball tournament infrastructure, and the National Hockey League recently signed a six-year deal with the company.

MLB Advanced Media has been working to spin off BamTech for more than a year. The goal is even-faster video growth.