MLB Advanced Media is advancing plans to spin off its surging business powering digital video streaming for third parties, and will present options to team owners in New York later this month.
Executives including Bob Bowman, MLB president of business and media, will present potential scenarios including investment structures and likely investors to the league’s newly merged business board of directors chaired by Kansas City Royals owner David Glass. MLB will hold its next set of owners meetings May 20-21 in New York.
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Specific figures for the value of a potential MLBAM spinoff were not available, but in any scenario, a spinoff of the third-party part of MLBAM would carry a valuation of at least several billion dollars, industry sources said.
Among the scenarios that have been under consideration are minority equity investments, partnerships with various media entities, a public offering, and full sale of the third-party business.
“We are contemplating the raising of capital for this business,” Bowman said. “Time will tell if that comes to fruition. But we’ve put a lot of research into this, and we will update the owners at our May meeting and get their input.”
Bowman said it is not likely he or other league executives will make a formal recommendation in concert with the presentation.
“It’s [the owners’] equity,” he said. “We’ll lay out the facts for them. But at the end of the day, we’re talking about the selling of ownership in the company, and it’s their equity.”
MLBAM started serious efforts in large-scale streaming for third parties in 2010 when it began supporting the back-end operations for ESPN3 and the digital coverage of the NCAA men’s basketball tournament. Since then, baseball’s digital arm has picked up prominent sports property and media clients such as WWE, Turner Sports, Sony, HBO and, most recently, the PGA Tour (see related story).
MLBAM’s third-party business now generates more than $100 million in revenue annually, part of an overall MLBAM haul projected to approach $1 billion this year and cross the 10-figure mark by the end of next year. There is no contemplation of selling off parts of the core MLBAM operation that produces baseball-specific digital products such as MLB.com, the 30 MLB club sites, baseball’s suite of mobile applications and MLB.TV game streaming.
The consideration of how best to structure MLBAM’s video support business comes as the entire sports and media landscape rapidly moves to embrace digital and over-the-top video. MLBAM has long been active in this space, streaming live baseball games since 2002. But over the past year, such initiatives have moved from a mere sideline to key revenue sources for many content owners. As a result, MLBAM’s activity in the area has mushroomed, even as competitors NeuLion, Brightcove and others have also accelerated their activity in the space.
“There has certainly been a marked increase in our inbound calls from a broader array of content owners,” Bowman said. “Anybody who has been on the fence about this is coming off the fence. So this has been a very rapidly growing business for us.”
