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| Disney said it would pay $1.58 billion to acquire an additional 42 percent stake in BAMTech to bring its ownership to 75 percent.
Walt Disney Co. said it is launching two new
streaming television services including one for its ESPN-branded sports
channel, while ending its deal with Netflix as it shifts towards direct content
distribution.
The media-entertainment giant called the move
"a strategic shift in the way we distribute our content" in an
industry moving to online services.
Disney said in a statement it would offer a
"multi-sport video streaming service" with its ESPN brand in early
2018 followed by "a new Disney-branded direct-to-consumer streaming
service in 2019."
The announcement coincided with Disney's boosting
its stake in the streaming technology group BAMTech LLC.
The move could accelerate the trend toward
"cord cutting" in which consumers drop extensive cable TV bundles in
favor of streaming services such as Netflix.
"The media landscape is increasingly defined
by direct relationships between content creators and consumers, and our control
of BAMTech's full array of innovative technology will give us the power to forge
those connections, along with the flexibility to quickly adapt to shifts in the
market," said Robert Iger, Disney chairman and chief executive.
"This acquisition and the launch of our
direct-to-consumer services mark an entirely new growth strategy for the
company, one that takes advantage of the incredible opportunity that changing
technology provides us to leverage the strength of our great brands."
With the shift, Disney said it would end its
distribution agreement with Netflix for subscription streaming of new releases,
beginning with the 2019 calendar year theatrical slate.
Disney will draw on its own content from its film
and television catalog for its consumer channel, and offer a sports service
which could fill a gap by delivering live sporting events.
The new ESPN service will air some 10,000 events a
year, including Major League Baseball, National Hockey League, Major League
Soccer, Grand Slam tennis, and college sports.
Disney, which also owns the ABC television network,
said its consumer channel would include its Disney and Pixar movies and content
from the Disney Channel, Disney Junior and Disney XD.
The company said separately it
posted a profit of $3.33 billion in the quarter ending July 1, a drop of nine
percent from a year ago, on revenues unchanged from last year at $14.2 billion.
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