Disney is in talks to invest in pro baseball’s video streaming business — a sign that the media giant wants to own the technology to help it power direct-to-consumer video services.
Sources say Disney is in advanced talks to take an equity stake in BAM Tech, the video technology business MLB Advanced Media has been looking to spin off into a separate company for some time.
MLBAM, which is jointly owned by pro baseball’s 30 teams, runs pro baseball’s Web video subscription service. It also handles video streaming for many large clients, including WatchESPN, the streaming service Disney’s ESPN already operates.
People familiar with the proposed transaction say talks are in advanced stages, but could still fall apart. Sources say Disney is one of multiple bidders who want to invest in MLBAM.
Disney and MLBAM reps declined to comment.
Disney and ESPN in particular have been under pressure from investors since last summer, when Disney CEO Bob Iger acknowledged that ESPN has been losing pay TV subscribers.
An ownership stake in a Web video operation could help the company launch and operate new digital services aimed at replacing some of the pay TV revenue that’s at risk from cord-cutters and people who never sign up for pay TV. Industry sources speculate that a Disney investment in BAM Tech would include an option to eventually buy a controlling stake in the company.
ESPN’s WatchESPN service, which replicates what’s available on conventional ESPN channels and also offers more games and shows, is available to ESPN’s pay TV customers. ESPN has tinkered with the idea of selling additional Web video subscriptions services directly to consumers, like a cricket offering it launched in 2015 and will sell again this year; the company has also talked about selling a package of NBA pro basketball games but hasn’t done so yet.
Iger has also floated the notion that ESPN may eventually sell its core service directly to consumers, over the Web, as HBO has started doing, with help from MLBAM. But ESPN President John Skipper has said the company won’t sell a direct service anytime soon.
“That’s not what we’re going to do,” Skipper said at the Code/Media conference in February. “We don’t sell it alone right now because we generate more revenue by being in a larger package, being ubiquitous across the households in this country, in which we can sell advertising. That simply works better for us.”
Disney itself has already launched a consumer subscription service in the U.K., and plans to expand its operations in Europe this year. People familiar with the company say it has previously contemplated launching Web subscription services in the U.S.
MLBAM’s Bob Bowman has spent years trying to figure out how to turn his video operation into a standalone company. Last summer he started a new push, by acquiring streaming video rights from the National Hockey League and hiring bankers to find investors for the company.
Last August, MLBAM sources said the company expected to get a value of at least $3 billion from investors. Industry sources say it has subsequently tried to get a much higher valuation from investors, but has run into skepticism about the value of its core Web streaming business.
Last summer Time Warner, which uses MLBAM to handle back-end operations for its HBO Now video service, bought iStreamPlanet, a company that provides similar services to MLBAM, for less than $200 million. Executives at Time Warner’s Turner, which is operating iStreamPlanet as a separate company, say they could eventually move Time Warner’s streaming operations there.
Bob Bowman on the difficulty of streaming live sports
This article originally appeared on Recode.net.