The Walt Disney Company has acquired a minority stake in video streaming company BAMTech.
On Aug. 9, The Walt Disney Co. confirmed that it has bought a 33 percent stake in BAMTech for $1 billion, which will be paid in two installments: one now and the other in January 2017. The company can also acquire majority stakes in the video streaming company in the future.
The acquisition comes at a time when more video customers are abandoning channel bundles sold by various cable TV operators and opting for on-demand video streaming on the internet.
"Our investment in BAMTech gives us the technology infrastructure we need to quickly scale and monetize our streaming capabilities at ESPN and across our company," said Robert A. Iger, chairman and CEO of Disney. "We look forward to working closely with BAMTech as we explore new ways to deliver the unmatched content of The Walt Disney Company across a variety of platforms."
The acquisition will also help Disney secure ESPN's future. The latest deal with BAMTech will be used for creating and distributing a new ESPN-branded, multi-sport subscription streaming service, which will be sold directly to consumers. Video streaming will include National Hockey League (NHL) and Major League Baseball (MLB) games, which are already licensed to BAMTech.
"Our goal is to ensure that our brands, notably ESPN, remain strong, vital and relevant in a totally changed media landscape," added Iger.
The multi-sport subscription streaming service is expected to launch toward the end of this year, but pricing of the service remains unknown. The offering from Disney will include live international, national and regional sporting events. However, the service will not stream content from ESPN's TV channels. The new service is said to complement existing ESPN channels.
On Aug. 9, Disney also announced its quarterly results for its third fiscal quarter ending July 2, 2016. Disney revealed that the company's theme park and movie division surpassed Wall Street expectations.
The release of The Jungle Book and Captain America: Civil War fueled revenues for Disney. The movie division increased 39.6 percent to $2.85 billion in the quarter. Revenue at Disney's theme park division rose 6 percent to $4.38 billion.
Operating income at ESPN increased during the quarter because of growth in advertising revenue. However, the subscriber number reduced and programming cost increased.
The company's revenue in its networks business rose 1.4 percent to $4.20 billion, but it missed analysts' expectations of $4.31 billion.
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