Walt Disney has agreed to pay $1bn for a 33 per cent stake in a video technology group which it will work with to develop a stand-alone subscription streaming service for its ESPN sports cable network.
Bob Iger, chief executive, said the investment in BAMTech, which was formed by Major League Baseball, would give Disney “the technology infrastructure we need to quickly scale and monetise our streaming capabilities at ESPN and across our company”.
As part of the deal, BAMTech will work with Disney on developing streaming services to deliver other content produced by the company, which owns brands such as the ABC broadcast network, Marvel Studios and Pixar, writes Matthew Garrahan in New York.
The new ESPN service will not include content that is currently available on the cable network, Disney said.
Disney unveiled the deal as it reported third-quarter earnings that were at the top end of analyst estimates, thanks to a strong performance by its movie studio, which was buoyed by hits such as Captain America: Civil War, The Jungle Book and Finding Dory. Operating income rose 62 per cent on the prior year quarter.
Revenues and operating income were flat at the group’s cable networks division, which includes ESPN. Disney revenue growth from contractual rate increases at the sports cable network was offset by a decline in subscribers.
Across the group revenues rose from $13.1bn to $14,3bn. Net income increased from $ 2.5bn to $2.6bn. Adjusting for one-time items, earnings per share were up from $1.45 to $1.62.
The shares slipped 1 per cent in after-market trading.
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