- The Walt Disney Company will pay the National Hockey League (NHL) $350 million USD to buy the league’s 10% stake in Disney Streaming Services.
- Disney Streaming Services powers the company’s streaming platforms including Disney+ and ESPN+.
- When the deal closes Disney will own 85% of the streaming subsidiary with Major League Baseball (MLB) owning the other 15%.
The National Hockey League (NHL) might not be the biggest sports league in North American but they are one of the most business savvy. They’re not afraid to think out of the box if there’s a potential financial upside. Case in point–earlier this year they took a stake in the US subsidiary of Aussie sportsbook PointsBet. PointsBet received the designation of ‘Official Sports Betting Partner’ but the NHL came away with an equity stake in successful sportsbook that has done a great job establishing itself in the nascent US market. The NHL has no significant potential downside risk in the deal so it will be hard for them *not* to make money. The more PointsBet grows the better it is for the league.
A smart investment made by the NHL in 2015 has just paid off to the tune of $350 million USD. On August 3, the league exercised an option to sell their 10% stake in Disney Streaming Services to Walt Disney Company. Disney Streaming services is the subsidiary that powers the company’s extremely popular ‘OTT services’ such as Disney+ and ESPN+. The deal is expected to close by the end of fiscal 2021. When it does, Disney will own 85% of the streaming subsidiary with Major League Baseball (MLB) owning the remaining 15%.
The circuitous route to the NHL’s $350 million USD payday began in 2015. That year, Major League Baseball spun off their streaming media subsidiary (MLB Advanced Media) into an autonomous operation called BAMTech. Anxious to make an investment of a potentially transformational technology, the NHL took a minority stake. One year later, the Walt Disney Company took a minority stake. As the inevitability of streaming became more apparent, Disney made the decision to leverage BAMTech to built out their own services. By 2017, they owned 75% and the enterprise was renamed ‘Disney Streaming Services’. In 2018, Disney launched ESPN+ and in December 2019 they launched their Disney+ streaming service
Fast forward to 2021–Disney+ (along with their Indian subsidiary Hotstar) has 116 million subscribers. The company also owns ESPN+ (14.9 million subscribers) and Hulu (42.8 million subscribers). Disney is still well behind industry leader Netflix (209 million subscribers) but in the past quarter they grew faster adding 12.4 million new subscribers. Netflix added only 1 million new subscribers. Streaming was already gaining significant traction but completely blew up during the COVID-19 pandemic. It wasn’t that long ago that streaming was a ‘cutting edge’ technology favored by early adopters but now it has become decidedly mainstream.
Disney and the NHL announced another partnership earlier this year–pro hockey will return to ESPN for the first time since 2004 via a seven year rights deal that will bring the league’s full schedule streaming package to ESPN+. In addition, 75 exclusive games per year will stream live on ESPN+ and Hulu, 25 regular season games per year on ESPN or ABC and provisions for the playoffs, opening night games and the All Star Game. In other words, the NHL gets more exposure while ESPN gets thousands of pro hockey games for ESPN+.
Disney could end up buying the streaming operation outright next year. MLB has the right to sell its remaining interest in the company much as the NHL did this year. In addition, Disney has an option to buy their stake that kicks in in 2022. Disney puts the minimum market value of the MLB share of Disney Streaming Services at $750 million USD.