Disney invests $1bn in video streaming group

Disney is looking to counteract a slowdown in subscriber growth at ESPN with a sharper focus on streaming services

Mickey Mouse, mascot of the Walt Disney Corporation. Disney is looking to boost its online and streaming services, as cable income falls

On 9 August, the Walt Disney Company acquired a 33 percent stake in BAMTech, with a view to securing the digital future of its sports TV network ESPN. Disney will pay the $1bn in two instalments, and has the option further down the line to acquire a majority stake in the company.

“Our investment in BAMTech gives us the technology infrastructure we need to quickly scale and monetise our streaming capabilities at ESPN and across our company”, said Disney CEO Robert Iger in a statement. The move comes amid a transformative period for the media landscape overall, with cable television subscriptions having suffered and streaming operations having gained ground. The decision to invest in BAMTech, therefore, positions the group for growth.

News of the investment arrived in the wake of Disney’s third quarter earnings report, which surpassed analyst expectations

“Bringing a multi-sport service directly to fans is an exciting opportunity that capitalises on BAMTech’s premier digital distribution platform and continues ESPN’s heritage of embracing technology to create new ways to connect fans with sports”, said ESPN President John Skipper. “As WatchESPN continues to grow and add value to the multichannel video subscription, this new service will be an outstanding complement.”

News of the investment arrived in the wake of Disney’s third quarter earnings report, which surpassed analyst expectations on the back of a buoyant period for its movie studio. Operating income for the segment was up 62 percent on the previous quarter, yet revenues and operating income for the group’s cable networks division have stagnated.

The group itself is under pressure to counteract a slowdown in subscriber growth at ESPN, particularly at a time where the cost of obtaining sports rights is spiralling. The focus on streaming, while not a solution in itself, is in keeping with a change in viewing habits, and signals to investors that the group is taking pains to address the key issues at hand.

To read more on how streaming services have taken a bite out of broadcast viewership, check out The New Economy’s special report.