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Disney Buys Out MLB’s Remaining 15% Stake in BAMTech Streaming Division for $900 Million

CEO Bob Iger expected to make "organizational and operating changes" at Disney in coming months that could result in impairment charges, company says

Disney
Courtesy of Disney

Disney now owns 100% of BAMTech, the streaming technology services group that powers the Disney+, Hulu and ESPN+ direct-to-consumer services.

Earlier this month, Disney paid $900 million to Major League Baseball to buy out the league’s remaining 15% stake in BAMTech, the media conglomerate disclosed in an SEC filing Tuesday. All told, Disney paid $3.8 billion to acquire BAMTech, now known as Disney Streaming.

In 2016, Disney made a $1 billion investment in BAMTech, giving it a 33% stake, and then a year later paid an additional $1.58 billion for a 75% stake. In August 2021, the NHL opted to sell its 10% interest in BAMTech to Disney for $350 million. As of Oct. 1, 2022, MLB’s 15% interest in BAMTech was recorded in Disney’s financial statements at $828 million.

MLB created the precursor to BAMTech in 2000 with MLB Advanced Media. In 2002, the league began streaming live video online with its MLB.TV service — years before YouTube was a glimmer in Google’s eye. In 2015, Major League Baseball spun off the streaming-technology division as BAMTech, setting up the eventual takeover by Disney.

Disney’s full ownership of BAMTech comes amid the company’s surprise Nov. 20 announcement that Bob Iger would return as CEO, with the board ousting former chief exec Bob Chapek after less than three years. Iger has a mandate from Disney’s board “to set the strategic direction for renewed growth.”

At a company-wide meeting Monday, Iger told employees that Disney’s streaming businesses should aim to achieve profits instead of trying to maximize subscriber growth.

In a memo to Disney staffers on Nov. 21, Iger said restructuring at the company will begin “in the coming weeks.” As part of that restructuring, Kareem Daniel, chairman of Disney Media and Entertainment Distribution, will leave the company.

In Disney’s 10-K filing Tuesday with the SEC, the company said “we anticipate that within the coming months Mr. Iger will initiate organizational and operating changes within the company to address the board’s goals.”

“While the plans are in early stages, changes in our structure and operations, including within DMED (and including possibly our distribution approach and the businesses/distribution platforms selected for the initial distribution of content), can be expected. The restructuring and change in business strategy, once determined, could result in impairment charges,” Disney said in the filing.

Meanwhile, Disney continues to own 67% of Hulu with the remaining 33% held by NBCUniversal (which as of Oct. 1, 2022, was recorded by Disney as valued at $8.7 billion). Under the companies’ 2019 agreement, beginning in January 2024, NBCU has the option to require Disney to buy out NBCU’s interest in Hulu while conversely Disney has the option to require NBCU to sell the 33% stake in Hulu. In either scenario, the buyout price will be based on Hulu’s “equity fair value” at the time with a guaranteed minimum value of $27.5 billion (meaning NBCU’s ownership stake is worth at least $9.2 billion).

Chapek had been angling to reach a deal with NBCU owner Comcast to acquire full ownership of Hulu sooner than the January 2024 cutoff date (while Comcast CEO Brian Roberts has said he’d be interested in buying out Disney’s majority share). Under Iger, it’s not clear at this point how Disney plans to proceed.