Walt Disney announced yesterday that it will pay a $1 billion to purchase a 33% stake in BAMTech, which is the streaming media unit created by Major League Baseball. ESPN will use BAMTech’s streaming platform to launch a new digital service, separate from its cable channels, that will air baseball, basketball and college football games that don’t appear on the regular ESPN networks. There will be no additional broadcast rights purchased by ESPN. Rather, it will be more about airing secondary and less popular matchups of the sports for which it already owns the rights.
From ESPN’s perspective, this represents a way to deal with cord cutters, who have cut their subscriptions to cable companies and who have cut into Disney’s revenues, which are driven tremendously by ESPN. For Major League Baseball this is obviously a huge cash infusion. One which will allow it to spin off BAMTech from MLB Advanced Media, which is where it is currently housed. MLBAM is, of course, its own spinoff of sorts from Major League Baseball itself.
In 1995, baseball’s total revenues were about $1.4 billion. That was for everything: gate, merchandise, broadcasting beer, hot dogs, you name it. In 2016 baseball got nearly that much for a minority share in a side business that didn’t even exist until a few years ago. Financially speaking, the game is doing pretty well.