We knew BAM Tech was striving to be more than just baseball, and a new investor may be interested in more than BAM Tech’s current client roster. Disney is supposedly interested in buying a third of the company — current valued around $3 billion — with the thought that Disney could eventually become majority owner of the streaming service leader. This is a big step towards cord cutters and digital distribution and may lead to a stand-alone ESPN option.
We’ve covered the problems the sports media industry is facing multiple times. Whether it was the explosion of the cost of TV rights creating a bubble or ESPN being a proverbial canary in the coal mine the current situation is not sustainable. And, it’s only getting worse. Disney’s play to purchase a substantial portion of BAM Tech could a be sign that the company is shifting its future business plans, and ESPN could be the first Disney property affected.
The thought is that ESPN could offer an a la carte stand-alone service. By purchasing BAM tech, Disney and ESPN wouldn’t have to build up their back-end and technology. In fact, they could instantly become a leader in streaming because of BAM Tech’s position in the market. This means ESPN could start offering digital programming without worrying about a vendor or growing pains from developing its own streaming service.
Disney could offer a stand-alone option for all of its offerings — which include ABC, Freeform, ESPN, Disney XD etc. — for one price or theoretically offer ESPN by itself. People who are currently paying upwards of $7 shouldn’t be surprised if the a la carte option is double or triple that. HBO Now is currently $15 a month for 3 simultaneous streams and ESPN would be as expensive, never mind ESPN2, SEC Network, ESPN College and the world-wide leaders other properties. Still, it may be the only answer to recoup the revenue Disney and ESPN has lost over the past year with subscriber numbers falling.
Long term rights deals aren’t changing and it is now up to ESPN and Disney to figure out how they will pay for them moving forward. Disney’s interest in BAM Tech is a way to seamlessly enter the streaming market, and it is a step away from traditional cable packages. MLB owners should be happy as well. A investment into streaming before streaming was the next big thing should pay off, especially if Disney is interested in the entire company.
Michael Colangelo is Managing Editor of The Fields of Green and Assistant Director at the USC Sports Business Institute.