The Mouse Buys BAM

mlb-advanced-media
A lot of things happened on Thursday besides Clayton Kershaw being placed on the DL. As written about previously in this blog (see previous article below MONEY, MONEY, MONEY), MLBAM, Major League Baseball Advanced Media, the digital/mobile unit which will give MLB owners a windfall is being sold. Disney as reported by Bloomberg, is about to buy a stake in the unit valued at $3.5 Billion. Walt Disney Co. agreed to acquire a one-third stake in the video-streaming unit of MLB Advanced Media, in a deal that values the business at about $3.5 billion, according to a person familiar with the matter.

The deal would give the ESPN owner a stake, and possibly control, over the power behind baseball’s digital operations plus independent streaming initiatives including WatchESPN, WWE Network, HBO Now and Glenn Beck’s The Blaze TV, according to Deadline. Under the terms of the pact, Variety reports that Disney has a four-year option to buy an additional 33 percent stake in MLBAM’s streaming unit, according to the report, which cited an anonymous source. WME-IMG was also reportedly among bidders vying for a stake in the unit. Thus, each owner who has already put in approximately $2 million to get BAM started, will add an additional $116.6 million in their coffers now and an additional amount equal to or more, should Disney take the addition 1/3rd within four years. Not a bad return on their investment. Imagine, this windfall is nearly equal to the entire amount Attanasio paid for the Milwaukee Brewers when he purchased it a few years ago. Now you understand how some owners have grabbed big stars

But BAM is more than just baseball. Other clients of New York-based MLBAM, headed by CEO Bob Bowman since its inception, include besides Time Warner’s HBO Now, WWE Network, WatchESPN, and Glen Beck’s The Blaze TV, Sony’s PlayStation Vue internet TV service, the Yankee’s YES Network and the PGA and more.

Last summer, MLBAM inked a six-year deal with the National Hockey League, under which MLB Advanced Media assumed the NHL’s TV broadcasting and Internet-streaming operations. MLBAM is said to be paying the NHL about $100 million per year for the rights to distribute the league’s out-of-market telecasts; in return, the NHL received an equity stake in MLBAM of between 7% and 10%.

In addition to TV and internet video operations, MLBAM operates the official League site, MLB.com, as well as each of the 30 individual team sites. In 2014, MLBAM captured, encoded and distributed 30,000 live video events, according to the league.

As for Disney, ESPN is it’s most lucrative asset, according to the Los Angeles Times, and it makes sense for the company to bet big on digital delivery of sports. ESPN needs to grow its revenue base to keep up with the escalation of sports rights fees at a time when its traditional source of revenue—cable affiliate fees—is under threat by so-called cord cutters and the move to smaller cable bundles.

Play Ball!

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