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Disney’s new billion-dollar purchase tees up stand-alone ESPN streaming service

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After a few months of fiscal tire kicking, The Walt Disney Company today announced it will purchase a third share (33 percent) of Major League Baseball Advanced Media’s streaming secret weapon, BAMTech. The technology service and streaming company is responsible for streaming video for major clients, including Disney-owned ESPN and Time Warner’s HBO.

As expected, Disney will pay a whopping $1 billion for its share in the company. The payment will be made in two installments, including one now and one in January. As part of the terms of the deal, the media giant will also have the option to acquire majority ownership of BAMTech “in the coming years.”

“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 longtime Disney Chairman and CEO Bob Iger in a statement. “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.”

There’s no question that video streaming is becoming key to media companies, and Disney is clearly making it a priority. Apparently, the media company wants a “path to control” for its streaming media future. Disney and BAMTech were said to be in advanced talks since April, per Recode sources.

As the streaming landscape seems to evolve daily, it’s not surprising that BAMTech has attracted such a powerful suitor — the company has successfully grown from almost two decades of streaming Major League Baseball games to hosting HBO’s stand-alone streaming service, HBO Now, and more.

Under the terms of the deal, Disney said that BAMTech will also help Disney’s struggling ESPN brand “launch and distribute” a new stand-alone, multisport subscription streaming service. The service will include content provided by BAMTech and ESPN, including “live regional, national, and international” events. Current content on ESPN’s linear networks, such as Sportscenter, will not be part of the service — at least not yet. Disney says it will roll out more details in the next few months.

ESPN chief John Skipper had this to say about the new partnership: “Bringing a multisport service directly to fans is an exciting opportunity that capitalizes on BAMTech’s premier digital distribution platform and continues ESPN’s heritage of embracing technology to create new ways to connect fans with sports. As WatchESPN continues to grow and add value to the multichannel video subscription, this new service will be an outstanding complement.”

Forbes suggested last August that BAMTech could some day compete with the likes of Netflix and Hulu. The company already has appealing technology and a sterling track record, including streaming major sporting events. More coveted content could, in theory, help the company reach new heights. Disney, of course, has plenty of content aside from ESPN, including networks like Disney channel and ABC, dual animation studios (Pixar and Disney Animation), and relatively recent purchases of marquee studios Marvel and Lucasfilm — i.e. all things Star Wars.

We’ll be following these events in the coming months, so stay tuned to Digital Trends.

Updated 8-9-2016 by Ryan Waniata: Updated post to confirm Disney’s purchase of BAMTech, ESPN stand-alone streaming service.

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