The Walt Disney Company, facing stiff challenges in the traditional television business, is making a $1 billion bet on video streaming.
After months of speculation, Disney said on Tuesday that it had concluded a deal to spend that amount for a 33 percent stake in BamTech, Major League Baseball’s fast-growing streaming division. As part of the agreement, Disney has the option to buy a controlling interest in BamTech in the coming years.
BamTech, which handles streaming for baseball teams and Time Warner’s HBO, among others, will work with Disney to introduce an ESPN-branded subscription streaming service, Disney said. Robert A. Iger, Disney’s chief executive, told analysts that the unnamed service would be introduced “probably by the end of the year” and include offerings like baseball, hockey, tennis, cricket and college sports — mostly rights that are already owned by ESPN but not televised.
Current content on ESPN’s roster of cable networks will not appear. Perhaps with an eye toward Disney’s cable-provider partners, Mr. Iger was careful to say that the service would be “complementary” to ESPN’s traditional networks. Keeping those channels healthy is “our top priority,” he added.
Mr. Iger declined to say how much subscriptions to the new ESPN service would cost, except to say that Disney planned to use a “dynamic” model, with viewers able to pay based on how much they watch.
Disney, like other media conglomerates, has long relied on steadily climbing cable subscriber fees as an engine. But cable networks have been losing viewers to online media, which has slowed growth, and Wall Street has responded unfavorably.
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