Acquired - Episode 37: BAMTech, Disney and "the Biggest Media Company You've Never Heard Of”

Episode Date: May 10, 2017

Ben and David continue Acquired’s “tech and sports” mini-series with Disney’s 2016 acquisition of a minority stake (with the right to purchase a majority stake at a later date) in BAMTech, the internet streaming company originally founded as part of Major League Baseball in the early 2000’s. However the importance of this story goes deeper than just sports, with major ramifications for nearly every major technology company from Amazon to YouTube. Even if you’re not not sure if baseball’s played on a diamond or a gridiron, tune in as we swing for the fences in predicting the future of TV! Sponsors:ServiceNow: https://bit.ly/acqsnaiagentsHuntress: https://bit.ly/acqhuntressVanta: https://bit.ly/acquiredvantaMore Acquired!:Get email updates with hints on next episode and follow-ups from recent episodesJoin the SlackSubscribe to ACQ2Merch Store!Topics covered include: What is BAMTech, and why is it, according to The Verge, "the future of television”?BAMTech’s origins as part of Major League Baseball's Advanced Media division ("MLBAM)”)MLBAM’s founding CEO Bob Bowman’s decidedly “non-tech” background, and growth into one of the most important tech leaders of the past 15 yearsInitial technology struggles and learnings from early streaming efforts (including a botched audio package of Ichiro Suzuki’s games with the Mariners for fans in Japan)Landing on a streaming model that works with the launch of MLB.tv in 2002/2003—three years before YouTube is founded! Improvement of the MLB.tv service and MLBAM’s streaming expertise over the next ten years through the rise of mobile, and simultaneous  growth of MLBAM’s revenues to over $1B annuallyMLBAM’s initial deals to expand its streaming services beyond baseball, starting with ESPN in 2010, then WWE, the PGA,  HBO and  the NHLThe importance of media rights, and MLBAM’s transition from a simple tech/infrastructure provider to  a full-fledged media company The decision to initiate a spin-off process for BAMTech from MLB in August 2015, and Disney’s $1B investment into the newly created spin-out company in August 2016Disney’s subsequent announcement that they’ll be  working with BAMTech to create a direct-to-consumer ESPN streaming serviceBAMTech’s  $300M deal with Riot Games in December 2016 for the media rights to League of Legends eSports content Bob Bowman’s announcement in February 2017 that he’ll be stepping back to from a day to day role, and  hiring of former Amazon VP of Video Michael Paull as BAMTech’s new CEO  Followups & Hot Takes:  Facebook’s struggles with Instant Articles Microsoft killing Wunderlist (David is VERY sad) Instagram continues its torrid growth, passes 700M MAU Amazon’s new Look  The Cloudera IPOConfirmation the ride sharing wars are far from over:  Didi raises $5.5B in the largest private funding round ever  The Carve Out: Ben: NYT’s 4th Down BotDavid: Wait But Why on Elon Musk’s “Wizard Hat"

Ah, freaking Forbes. God, I hate these quotes of the day. Most annoying website ever. Welcome back to episode 37 of Acquired, the podcast about technology acquisitions and IPOs. And today, spinouts. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. So today, David and I are continuing our journey along sports and technology by diving into Major League Baseball's 2015 spinout of a company called BamTech from their Advanced Media, or MLBAM group, and the 2016 minority investment into BamTech by Disney. So David, I'm ridiculously pumped for this episode. Oh, me too. Not only, and for listeners, even if you don't care about sports,

you should keep listening because not only is this one of the most interesting sports tech deals that's happened in the last decade plus, but this is actually, I think, really important to understand from just a pure technology standpoint, you know, when it comes to the future of television and things we've talked about on this show a lot with Twitch and Amazon and YouTube and even Snapchat. So stay tuned for this one. Yeah, it's like there was a secret like big tech company hiding inside of a sports league for like a decade and a half. And they had more foresight and more premonitions than the best streaming services out there and had better technology.

And I mean, reading into all this, I really couldn't believe it. Like we give a lot of credit to a lot of these other companies, Netflix being one of them for being these sort of digital pioneers and baseball is making bets five years earlier. Totally, totally agree. This is gonna be fun to dive into. Yeah. Well, before we before we get to it, a couple of administrative things as usual. We love iTunes reviews. Listeners, if you like the show, if you've been listening for a long time, or if you're brand new to the show, it's how we grow the show. It's how others find us. And it lets us do more cool things and bring on more cool guests. So if you have a minute, would love a review on iTunes. And

thanks so much for that. Our Slack has been blowing up recently. So we've got a thing called Slack and I'm sure many of you use it at work. And there's over 600 of us that are hanging out in the acquired Slack now. You can get to it by going to acquired.fm and there's a little widget on the right. And there's a ton of cool conversation in there. A lot of great criticism and feedback of episodes after we release them where we hop in and talk about it with you guys. But then also a lot of people link to breaking news. And yesterday was a great discussion of Amazon's earnings call.

And honestly, we get a lot of great color for upcoming episodes from the community. So thanks to everyone who is an active participant in Slack. Yeah, absolutely. Okay, listeners, now is a great time to tell you about longtime friend of the show, ServiceNow. Yes, as you know, ServiceNow is the AI platform for business transformation, and they have some new news to share. ServiceNow is introducing AI agents. So only the ServiceNow platform puts AI agents to work across every corner of your business. Yep. And as you know from listening to us all year, ServiceNow is pretty remarkable about embracing the latest AI developments and building them

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With ServiceNow, AI agents proactively solve challenges from IT to HR, customer service, software development, you name it. These agents collaborate, they learn from each other, and they continuously improve, handling the busy work across your business so that your teams can actually focus on what truly matters. Ultimately, ServiceNow and Agentic AI is the way to deploy AI across every corner of your enterprise. They boost productivity for employees, enrich customer experiences, and make work better for everyone. Yep. So learn how you can put AI agents to work for your people by clicking the link in the show notes or going to servicenow.com slash AI dash agents. So David, I think we're ready to dive in. Let's do it. History and facts.

Okay, so question number one, I bet on many listeners' minds is, what is BAM Tech? So Forbes calls BAM Tech the, quote, biggest media company you've never heard of. And this story is, you know, as Ben alluded to, they are probably as much as Netflix and Amazon heard of it. I'd come across it in a lot of research I was doing for some of the things we're working on at Pioneer Square Labs. But it really took kind of like diving in for a few hours yesterday to really understand how the structure of this whole thing works and how the timeline lays out. And there's a lot of cool stuff in here. Yeah. And, uh, and I knew it because I have been a baseball fan for a long time and a subscriber to MLB dot TV, which is where BAM tech gets its origins. So all the way back in the year 2000, um, major league baseball, the sports league, um, had the foresight to start a new division within within the league and they called it major league baseball advanced media and the mission that they gave this new division was to build and operate a website for each of the 30 teams in the league rather than saying

you know the mariners and the giants and thekees, you guys all go off and build your own websites. We're going to centralize this in the league, which is kind of brilliant in its own right. Right. Like when you think about in that era, what what the worst website would have been of 30 sort of random owners who are hiring random web development firms to do the contract work for that. It's probably a good thing they centralize that function. It certainly is. But it kind of got off to an inauspicious start because the league and BAM itself made the same poor decision right off the bat.

And they, like any super corporate IT department, because this is basically, you know, major league baseball's it department, they decide to outsource the website building to a consulting firm and pay them a ton of money. And, you know, as expected fashion, uh, the consulting firm basically fails to deliver and the websites totally suck. So Robert Bowman, who was the newly appointed CEO of a major league baseball advanced media, which we're just going to call BAM for the rest of the episode. He quickly made the decision, which ends up being probably the best decision that Major League Baseball has ever made to build a tech team in-house, bring on really good developers and start owning and building out all the technology inside of BAM. Yeah, pretty interesting. Yeah, very interesting. So that was...

And also probably, I mean, for anyone out there that, you know, our audience is probably mostly a tech audience, but for people that don't work at tech companies, it's probably actually hard to know what the right things to hire for are in this area. I mean, not only is it web development, but they're looking to do things in ticket rights and they're looking to do things not yet in streaming, but very shortly thereafter. And thinking about how do people that have backgrounds in sports, sports law, contract negotiations, media, how do they build like a strong tech team inside kudos alone to them for that yeah and and bowman really um he really reinvents himself so he had been before becoming the ceo of bam within major league baseball he hadn't been a

tech guy either he was the coo and the cfo of a big conglomerate called ITT. It was funny reading about this. I remembered all those commercials growing up for, you know, ITT Technical Institute. Oh, yeah. Same thing. So that's where Bowman came from. He also he'd been the treasurer of the state of Michigan and had thought about running for governor. And much earlier in his career, he was an investment banker at Goldman Sachs.

So, you know, he's not he's not your typical Silicon Valley executive. No. Um, but this was also, you know, relatively early days for the internet and, and kind of in the middle when they start of the first tech bubble. So he, he figures it out along the way and they pretty quickly start doing a lot of really innovative things with this team that they build in New York. Uh, the headquarters of BAM are actually really cool. They're in the Chelsea market in New York, this amazing building and pretty quickly thereafter, once he brings it in house. So in 2002, the season before Ichiro Suzuki had joined the Mariners from Japan,

uh, and oh man, Ichiro is so much fun to watch. And his first season he had, he had joined the Mariners from Japan. Uh, and oh man, each year is so much fun to watch. And his first season he had, he had won the rookie of the year and the AL MVP. And of course he had this huge following in Japan, you know, pretty much the whole country was, and still is obsessed with each hero. And they wanted to follow, they wanted to follow his games. And so Bowman decided and Bam decided that they were going to start streaming audio of the Mariners games on the Internet so that people in Japan could could follow Ichiro. And unfortunately, though, that also doesn't go too well. They spend millions of dollars building all the tech to do this, millions of dollars advertising it, and they only get about a thousand subscribers. So we're two years into bam at this point and they kind of have two fails they made the bad

the wrong call on outsourcing the websites and then they sunk a ton of money into streaming audio and that failed and david is probably worth talking about the the way that um the agreement is structured between bam and the teams because Major League Baseball, I believe, is owned by the owners of the teams. Each team has committed $1 million for four years for a total of between the 30 teams for a total of $120 million to capitalize this project. And so, you know, they draw their first 30 million dollars they draw their second 30 million dollars here we are 2002 big failure they've drawn 60 million dollars from from the teams that they've promised you know this is going to be a um i i think they've actually said this is going to be a revenue generating uh organization within major

league baseball and like big flop, $60 million in. Yep. And so this is where, this is where things start to turn around and where, you know, I have to imagine Bowman really kind of gets forged through the fire into, you know, learns how to be a great executive and technology executive. Um, so he makes one really good decision later in 2002. And that's that he realizes that because of, as you were saying, Ben, this, uh, the way the deal was struck between BAM and all the teams that they have the rights to sell tickets to games online, uh, via the company's website. And so they do Bowman does a with Ticketmaster in mid 2002 to partner with them to power

the sale of tickets on the team's websites. And still to this day, if you go to the Mariners or the Giants or the Yankees website, uh, to buy a ticket, uh, it's done in partnership with Ticketmaster. And as part of that deal, Ticketmaster pays bam, $10 million upfront. And that's really the moment where things start to turn around and they can now invest that money. They stop drawing money down from the teams. They now have their own revenue stream and can start to do even more innovative stuff. Yeah. It's some nice cashflow. Yeah. So towards the end of that same season in 2002,

so where they've had this horrible failure with audio. But what they learned from that is that audio failed because people really wanted to watch the game. You know, that's why people watch baseball on TV and live. They didn't just want to hear it. They wanted to see it. So unlike most of these sort of like online media failures, you think about the technology didn't fall down or anything. It was actually just insufficient. Like they didn't have enough people willing to pay for just the audio. Yep. So again, this is where it's really impressive. By the end of the season, same season in 2002, they start experimenting with streaming video online and nobody's doing

this in these days. This is 2002, uh, three years before YouTube. They stream the first game that they stream is in late August. Uh, they stream a Texas Rangers and New York Yankees game online. The quality is terrible, but people love it. And then they kind of race to build a product around this. And by the end of the season, they sell a nine game pennant race package. So streaming games online, people are paying for this. And then they sell a $20 post-season package and people love it. And so then they scramble during the offseason. And by the start of the 2003 season, they launch, do a full launch of MLB.TV.

And for $80 for the whole season, you can stream every out-of-market game on the internet. And this is huge. You know, until this point, whenever people wanted to watch baseball, they had to turn on, you know, ESPN or, or their local sports, you know, regional sports network, and they could only watch what was being shown. Now, all of a sudden you pay $80 directly to major league baseball and you can watch every out of market game, you know, whenever you want at any time on the internet. It's pretty awesome. Yeah. And the speed at which they were able to do that is pretty laudable and the way that they were able to do it. Because you sort of think in a business that's dangerously cyclical and seasonal like this, where you sort of only have one shot per year to introduce something new for

the season, the idea that they did their first little test with just streaming one game and then another little test with a postseason package you can buy and then came out with the real deal for that, you know, $80 full season package, which I think got 100,000 subscribers. So like 8 million in revenue from that first, you know, season that went fantastically well. I mean, that's that's narrative development. And they were able to do it even within the constraints of this. this, you could, uh, you could very easily see management saying, well, you know, we're going to try that for next year. Yeah. And I think what's super impressive, like two things, one, this is 2003, you know, again, we're, we're years before YouTube. Nobody else is really doing streaming video at this time. It's four years before Netflix

went online. Yep. Absolutely. absolutely. No streaming Netflix. And like you said, they get 100,000 subscribers right off the bat. That's $8 million in subscription revenue. But then they're also selling ads on top of the game. So this pretty quickly becomes a really interesting high margin business for Major League Baseball. And they're building, BAM is building all this expertise. You know, this is hard. They're streaming, you know, 15 games every single day

all around the world. They're building all this expertise and streaming live video and not just, you know, live video, but live video where it matters that, you know, it can't be 10 minutes delayed because if the score changes

and you hear about it, you know, somewhere else and you're delayed watching the game, people get upset about that. Yep. And a big selling point for them is is effectively handling that multi-platform handoff because for them, they I was just listening to a podcast that will throw in the show notes where the commissioner of Major League Baseball is on one of Fortune's podcasts. And he's mentioning that one big core asset to this, it's not just the raw video encoding and fallbacks and relationships with the CDNs to distribute the video files themselves. It's actually the expertise of, hey, I'm watching this on my TV, or I call it my Apple TV, and I switch over to my phone,

it better pick up exactly where I left off. And it can't pick up in the middle of the next inning where I accidentally see the score. That destroys the experience. So they have developed expertise in this thing that is initially quite specific to their use case. But then we'll see in the future, as it becomes more important to to be able to stream live events in sort of this real time way, cross device over the Internet. That's a huge asset. Absolutely. And and they really ride the wave, not as bad as you point out, not only of video growing on the Internet over the next 10 years, but also of mobile and devices. Major League Baseball's app gets featured by Apple at basically every major developer announcement. So

when they announced the app store for the iPhone, Major League Baseball is one of the first partners and first apps featured on stage with Steve Jobs during the announcement, featured during the launch on stage during the launch of the announcement, featured during the launch on stage, during the launch of the iPad, on stage during the launch of the Apple Watch. They really become one of the best, one of the best technology teams in the business. I forgot about all that.

In terms of bringing video to consumers' devices wherever they are. Yeah. Boy, and I'll say, I do, so far I've just been incredibly praiseworthy and it's good to be a little bit more balanced. I totally remember some times, call it eight-ish years ago, where I was like tuning into a game on the streaming service and like it did have some weird hiccup. And like I saw, I think actually the use case was I was watching like an hour delayed or

something. And then it flashed forward to the real time. And then I saw the score. And then I think that actually I seem to remember that bug being pretty widespread because I remember it sort of blowing up on Twitter as a big problem. But like they've totally had these hiccups along the way where they've had to learn how to be really good at this sort of ensuring a consistent experience, but like they've totally had these hiccups along the way where they've had to learn how to be really good at this, uh, this sort of ensuring a consistent experience, quote unquote, live viewing. Yep. Good point. It definitely did not happen overnight,

but the business, it keeps growing year over year. They eventually do raise prices from $80, uh, a year for, for ML, MLB.tv. They raise that over time, but the subscriber base keeps growing to the point where in an interview in 2012, Bowman is quoted as saying that BAM makes about $620 million in annual revenue, which is really meaningful for the league. Yeah. So think about this. I mean, they were promised to be capitalized with $120 million. It's an interesting stat that they only ended up taking $77 million from the teams after, ticket master deal. And then that $8 million in revenue from, from, you know, that, that a hundred thousand subscribers, uh, in that, that first season. And so, you know, they, they really, they did really well by the teams, the league.

Yep. And along the way, as, as we've been saying, they build all this expertise in streaming video and particularly live video. And so back in 2010, they make kind of the first move that starts setting them down another path, which is not just streaming baseball and major league baseball, but they do a deal with ESPN and they become the technology provider that powers ESPN three, which is ESPN's new site that they launched then that covers all of their internet streaming. So you still have to be an ESPN subscriber via your cable service, but it's now bam and major league baseball in the background that's powering all sports that ESn is is

streaming online and so they do that for a couple years just as the technology back-end provider and then in 2014 a bunch of really interesting thing happened things happen so one that's the year that amazon buys twitch as we've talked about which obviously obviously is another form of sports in esports and live video streaming on the internet. But BAM makes a pretty big move. So they announced a partnership with WWE, the Worldwide Wrestling. I forget what it stands for now. It's not the Worldwide Wrestling Federation. It's Wrestling Entertainment or something something like that it's one of my favorite uh rebrands ever because the wwf the world wildlife federation had a trademark and then the wwe had to get off and they sued them right i think so also this wwe is like world wrestling entertainment

but like it needs a it needs a an organization or like like you even just said, the World Wrestling Entertainment Organization because entertainment is not a noun. Right, right. Anyway, the point is this is a big deal because for the first time now you have multiple sports leagues putting their content powered by the same backend onto the internet. And this is when cable companies and media companies are really starting to worry for the first time. It's been going on for years, but about cord cutting. And the only thing that's holding the cable bundle together at this point really is live sports. And so this is the first crack you can start to see in the seam of the live sports cable bundle package that it could actually be coming online. Yep. And then in 2015, early the next year, BAM kind of continues that trend and they do a deal with with golf, with the PGA Tour, and they announced that they're bringing golf online, too.

And so the momentum is kind of continuing. And then later in 2015, and this might have been, if you've heard of BAM, Major League Baseball Advanced Media before, this might have been where you've heard of it if you're not a baseball fan. They do a major partnership with HBO. And HBO decided to bring their own sort of cord cutting service online for the first time. You had been able to watch HBO shows on the Internet, but again, only if you were a cable subscriber. They do their first.

And that was HBO Go. That was HBO Go. They announced HBO Now, which is you're able to subscribe as a non cable subscriber directly to HBO. And it's and it it's bam in the background that is powering all of that. Yeah. And fans of Game of Thrones who, uh, who had HBO now will remember that there was some, uh, uh, some big issues with, uh, HBO building out their own, um, their own in-house streaming. And, uh, they actually dropped, like there was an episode of, of Game of Thrones where there's too many concurrent viewers and you basically just couldn't couldn't watch it and people were

furious and twitter's blowing up and people had to wait till the next morning to watch it and yada yada yada and i you know they popped their head up and looked around and said we're not willing to take a chance on this for our uh true over the top product and uh and outsourced it to to mlbam yep that's what advanced media has been gotten really good at over the top product and outsourced it to MLB AM. Yep. That's what advanced media has been gotten really good at over the past decade. So that was in April of 2015. And then in later in 2015, the first really big other big four professional sports league does another deal with BAM and this is the NHL. And so the NHL announces that they're going to contract with BAM to power all of their streaming. But what's interesting here,

and this is where really the cable industry really starts to get nervous, is it's not just powering the back end, but they actually do a rights. So at the NHL takes a rumored to be about a seven to 10% equity stake actually in BAM in a major league baseball advanced media. And in return, um, BAM promises to, to pay them a certain amount of money each year, and then they get to monetize all of the content. So the subscriptions that people pay to subscribe to NHL, that's BAM that's monetizing that just like it's ESPN that gets the cable subscription fees and all the advertising that they run on top of it. This is really a watershed moment where BAM starts to look like a cable provider, like a next generation cable provider itself. Yeah, you can totally see why this makes you nervous. Because if you're an ESPN,

or any sort of rights acquirer, your whole business model is taking a look and saying, okay, well, if we buy these rights, what can we get for them in terms of the advertisements we're going to show viewers and the subscriptions, whatever vehicle you want to use to monetize that, like, okay, I'm going to pay hundreds of millions of dollars upfront for these rights for X years. I really hope we can architect a business that's going to generate more than that. And I think, you know, that on its own feels kind of like a tenuous business model. But as that moves closer and closer to the source of the actual rights holder, you can see that that totally looks like it's going to disintermediate you as someone whose business it is to take on the risk of buying those rights and monetize it if those organizations themselves are getting better and better at monetizing their own, you know, unique IP rather than potentially licensing it out to, uh, to you to figure out. Yep. This is disruption of the

middleman. This is the internet at work here. Yep. And, uh, so when this, when this happens, the verge actually, so this is the verge does a really great long piece that we'll, we'll link to in the show notes covering kind of the history of BAM that we've taken a lot of this history from. And they say, this is a quote from them, the new approach moves BAM beyond just being a white label service provider, putting them in position to become an ESPN of the internet age, competing against the likes of Netflix, Hulu, and Amazon, where they have the one thing that those services lack live sports. Um, and, and Bowman himself is actually quoted as saying, we knew we wanted BAM tech over the longterm to be not just

a vendor, but also a rights holder, exactly what you're saying, Ben. And that also being a buyer of rights was the best business model. So getting these rights has obviously been important. So this is something that they were working on kind of for many years. And this is the vision of, of this next generation. Like what is the ESPN of the internet look like? And, and BAM is so well positioned. Totally. And in that, that Rob Manfred, um, uh, podcast I mentioned earlier, Rob, Rob Manfred's the, um, commissioner of major league baseball. He mentions that there's kind of a, they look at this in three different ways. One is the obvious way that, hey, baseball is going to be broadcast. Right now it's broadcasting cable bundles as that gets, you know, skinnier and skinnier and live

sports provides more of the value. This is a hedge against that, right? It's just a simple, you know, we need to have a little bit of option value for the future on how we our content gets distributed and this is kind of our own way to to do that instead of outsourcing it two is um hey this is actually a really great technology company that that happened to be invented inside major league baseball um that could be a services organization for other um other content plays which is what we saw with the pga with wwe and potentially more to come and then what we saw with with the nhl is their sort of third business model of actually being that rights holder and uh and monetizing other people's rights and that you know you could imagine a scenario this this is getting into themes later but like

what if baseball declines in popularity but major league baseball on its own or or bam is is uh an even more valuable organization because they own the rights to many other forms of entertainment and they own the pipes to distribute it that's kind of a crazy future that is kind of a crazy future um but it's also one that uh and this this is the next thing that kind of happens in in the history and facts here um one that doesn't make a lot of sense like it doesn't make sense for for the collective 30 teams of major league baseball to own basically the future of internet television um totally and that hamstrings them right because they can't really issue stock to employees they can't uh

they don't control their own destiny as much. Exactly. And and this has become, you know, a tech company at this point. And so they're competing with engineers and executives with, you know, Facebook and Amazon and Netflix, you know, all of whom are issuing stock compensation. But bam, bam, can't do that. So they realize they need, they need to fix this. Uh, and so immediately after the announcement of the NHL deal, major league baseball announces that they're spinning advanced media out into its own separate company called BAM tech, uh, and that they're going to start talking to investors to, to buy a stake in the company and finance it. And, and they'll retain a large equity stake, major leagueball will, but it'll finally become its own independent company. And so they work on that deal. It takes a whole year. And then finally, in August of 2016, it's announced that they have found that partner, that investor that's going to help spin the company out. And it is surprise, surprise,

Disney, which, of course, owns ESPN and ESPN, which for 20 years at this point has been the largest part of Disney. Yeah, almost dangerously so in this era, too. Yep. And and so Disney announces this is August of 2016 that they're going to acquire a one-third stake in the company for a billion dollars. So they're valuing BAM Tech at $3 billion. And then they also have the option to acquire a majority stake in the future. And this is just classic Disney. A similar thing happened with ESPN. Disney doesn't own 100% of ESPN. They own 80% of ESPN. And actually, the Hearst Corporation owns a minority stake. Oh, they do currently? Yep. Oh, I thought ESPN. They own 80% of ESPN and actually the Hearst corporation owns a minority stake. Oh, they do currently. Yep. Oh, I thought ESPN was wholly owned. Nope, not wholly owned. So Disney is very happy to do deals like this. And this is one of the reasons I'm sure why

they end up sort of winning, uh, winning the investment here and becoming the partner. They're happy, you know, major league baseball, as we were talking about, this is such a valuable asset. They, I'm sure, want to retain their equity stake. And Disney says, as long as we have a path to controlling this, yeah, we're happy to have minority shareholders. Yep. And boy, Disney gets great option value here, too. I mean, they just get to see how, I don't know, every source I've read says over the next few years to decide if they want to buy a another third to give them a majority share of the company but um yeah it's not public exactly what the deal is but it has been announced they have an option to acquire a quote majority stake

in yeah in bam tech yeah and i think could it have been anyone else like we're gonna get into that in another section but like disney is is just the absolute perfect partner for this, right? Lucasfilm was going to be. And for Major League Baseball, even though they have a different set of motivations, they are very motivated to want to retain an equity stake over time. And Disney can say, yeah, we've done that many times. We're happy to do that. And so concurrently with the announcement that Disney's going to invest and have this path towards control ownership of BAM. They also announced that they're going to start working on a direct to consumer ESPN subscription service powered again by BAM tech. Um, but this is huge. This is going to be the first time, you know, ESPN, uh, the first time that ESPN is going to be available directly to consumers outside of a cable

bundle. And it's really, you know, it's been at this point years that ESPN is the only reason so many people continue to subscribe to cable. So this is Disney saying, okay, we, we now is finally the time we're going to move past linear television. Yeah. So David, I saw that too, but there's this weird like thing that they also followed that with that sounds like it's hamstringing the deal and it's got to be to just like ease the concern of of uh the cable companies yeah so they're not going to include any current espn content but you know the door is open as and i'm sure the other reason for that is that all these rights deals have already been negotiated for the next several years and are locked up. But as those rights deals come up, you can bet for sure that Disney is going to be

moving large portions of their content into their direct to consumer service. Yep. And actually this we keep having this like very serendipitous timing with episodes. We definitely didn't know anything about the ESPN layoffs that were coming. But this last week, there were very large-scale layoffs inside of ESPN, particularly around a lot of Baseball Tonight's programming. And one really interesting thing that Ben Thompson pointed out in Stratechery this week is that the internet and the availability of instant replay all the time has really taken away a lot of the initial value prop of SportsCenter. I mean, you'd have to wait to go see highlights on SportsCenter, you know, the next morning after the sporting event occurred.

And that's really just not necessary now. I mean, if I freaking can find, well, it used to be Vines, I can find, you know, tweets with embedded videos or gifs of that insane diving save seconds after that it happens yeah i mean remember growing up when like you know staying up till 10 or 11 p.m to you know for sports center to come on watch what the frantic editors had put together in a couple of hours since the game yeah yeah so i the point i'm driving at here is that like you know maybe it doesn't matter that much that that ESPN's current content is not going to be repurposed for's all of the apps. They're on every device with all different types of experiences from highlights to stats overlays and data through to full video. Yep. And I want to make two points here that I think I just want to make

sure before we move on. One is I don't know if we disclosed the enterprise value of BAM Tech at spin out when Disney bought a third of it was $3.5 billion. So think about that initially capitalized with was 77 million inside of Major League Baseball, you know, spun out at a value of three and a half billion dollars. And the other thing that I want to clarify is, we keep talking about this over the top service. A lot of listeners are probably familiar, but that basically refers to the idea that that number one, I think OTT is like the stupidest name of all time. But every everyone's talking about the move to OTT services. This is like this is like my doctor

and my doctor and that it's not a wave as long as you have a title for it that your average person doesn't understand. Exactly, exactly. But basically, it refers to the idea that everyone has a set-top box, and that set-top box is controlled by their cable company. And that cable company sells them a cable bundle, and then that cable bundle consists of a whole bunch of affiliate or carriage fees that, that, um, are charged to the cable company by the channels basically. And what over the top does is basically saying, we don't need your set top box. We're going over the top with it and we're going direct, direct to consumer. Yeah, this is, this is serious. This is the business model innovation I was talking about in the Clippers on our, on our last show. Okay, so August 2016, the spinoff

happens. Disney is the partner. Very shortly thereafter, in November of 2016, BAM announces that they're expanding beyond the US and they're coming to Europe. They're partnering with Discovery Communications, the media company that owns the Discovery Channel and many other forms of content to buy the rights to stream the Olympic Games in Europe. So big announcement, they're going global. And then shortly thereafter in December, and this is really interesting going back to Twitch, they do a direct rights deal with Riot Games, the owners and publishers of League of Legends, for BAM to have the rights to stream all official League of Legends competitions through 2023. Yep. And that is a big, big deal. That is a guaranteed $50 million per year deal that

BAM Tech is going to pay Riot. And in the esports space right now, we're all wondering, what does this mean? Because right now you go and you can watch a League Championship Series game with millions of other people for free that's ad-supported on either Twitch or YouTube. And there's this company, BamTech, that's paying $50 million to Riot per year, and so far, nothing. like they have these rights but we haven't seen anything with it and we're gonna we're really gonna see something i would assume in the next six months um where there's a a direct offering that that is built by bam tech that is the maybe the one and only way to go and watch these league of Legends matches. And I think we will probably get into esports in future episodes. But Disney slash BAMTEC is making these big bets throughout their

history on things that are before their time. And that's shown here yet again with a big purchase of these rights. In fact, some of the biggest dollars that are moving around in the entire esports space, probably years before most people have any idea that that's even a thing. Yeah. And this is something, you know, for BAM to be able to start to do this, they really need a partner. You know, this is another reason why Major League Baseball, you couldn't finance doing this, but with Disney and the, you know, the balance sheet that Disney brings to this, they can really start to be a player in this, this right space. Yep. So the last thing that happens just a couple of months ago in February, 2017 Bowman, after a 17 year run as a CEO of BAM

steps back from, from day-to-day operations as CEO, and they hire a man named Michael Paul to be the new CEO. And this is really interesting. Paul had been the VP of video at Amazon and was the person responsible for the development of prime video with Amazon's net Netflix competitor. And of course was super involved with Amazon's acquisition of Twitch. Um, and before Amazon, he'd been a TV exec at Sony and Fox and time Warner but this is really interesting when you think about the rest of Disney's streaming catalog Netflix is obviously a big partner of theirs as is Apple and and others but you know Pixar, Lucasfilm, Marvel, all the Disney videos and now you have the guy coming from Amazon who built their Netflix competitor, you can start to see how BAM

and Disney together could really be the full service, you know, a very compelling full service video provider to consumers over the top on the internet. Absolutely. Absolutely. All right, listeners, our next sponsor is a new friend of the show, Huntress. Huntress is one of the fastest growing and most loved cybersecurity companies today. It's purpose built for small to midsize businesses and provides enterprise grade security with the technology, services and expertise needed to protect you. They offer a revolutionary approach to manage cybersecurity that isn't only about tech, it's about real people providing real defense around the clock. So how does it work? Well, you probably already know this, but it has become pretty trivial for an entry-level hacker to buy access and data about compromised businesses. This means cybercriminal activity towards small and medium businesses is at an all-time high.

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In fact, it's pretty wild. There are over 125,000 businesses now using Huntress, and they rave about it from the hilltops. They were voted by customers in the G2 rankings as the industry leader in endpoint detection and response for the eighth consecutive season and the industry leader in managed detection and response again this summer. Yep. So if you want cutting-edge cybersecurity solutions backed by a 24-7 team of experts who monitor, investigate, and respond to threats with unmatched precision, head on over to huntress.com slash acquired or click the link in the show notes. Our huge thanks to Huntress. Should we move on to category? Yeah, that couldn't

have been the more perfect segue because originally as I started doing this research, I was thinking, oh, a technology acquisition or, you know not quite an acquisition but a technology investment because it's you know the best technology that provides these services to anyone that that wants to do their their back end streaming but really i mean they've been they've been expanding and they've been kind of taking over a much more significant part of uh part of a business here where they're actually the rights holder and they're actually distributing this content on their own. So, I mean, I think they're really their own business line for for Disney and their hedge against the decline of the cable model to be the ESPN of the Internet age. But as we talked about, when you think about all the content that Disney has, there's really potential here to be business model disruption for the whole company and how they, their relationship to consumers of that content, you know, right now, all Disney content is mediated through, through a movie theater or through, through cable or through Netflix or some

other distributor. This is really a way for Disney for the first time for their content to start to have a direct relationship with customers. Yep. And the magic of these internet business models is shortening value chains, where when we start to say, oh, it's sort of the Disney of the era, I'm sorry, the ESPN of the internet era. Well, it's the ESPN and the cable company of the ESPN and the Comcast of the era. Right. Because in these previous, previously, you just need so many more steps because distribution is hard, like offline distribution is hard. And so these cable companies have an incredible moat around them against other cable companies, but not against low end disruption from Internet based services where, you know, in that old world, the model is content and then they sell that to a rights holder and then the rights holder gets a carriage fee from selling that into or distributing it through a cable company and then it goes to consumer but you really combine those middlemen here with the internet and and have the

ability to go much more direct and that happens in every business yep and it's so ironic here this is i believe over 10 years ago at this point comcast actually once made a hostile takeover offer for disney and tried to buy disney and you know fate is uh fate is a cruel mistress here and it's it's disney that's making the play to not you know not buy comcast but just obsolete them yep i mean mean, it's the smiling curve, right? I think, I feel like half of my life is informed by Ben Thompson right now, but that piece was so great about self-driving cars and making the reference that way upstream, you have the kind of component makers, or in our case, the content producers. Way downstream, you have the actual whoever goes direct to the

consumer and everyone in the middle, their value gets diminished over time. So if you're a Netflix and you're effectively all you have is distribution, well, like the Internet changes that, right? The Internet makes it so you become much less valuable. And if you're the content producer, Disney, you've dramatically grown your value and if you're in the middle the the comcast you've dramatically lessened it yep yep and and netflix of course gets this and this is why they and and amazon too were investing so much in in producing their own content but uh you know it'll be interesting now that that disney the 800 pound gorilla has really also stepped in as a direct competitor in this space.

Yep. Okay. So what would have happened otherwise? Yeah. So I really like, I'll just kick it off with this one excerpt that I grabbed from that Verge article that I thought was really great. BAM has been flirting with the idea of a spinoff since 2005 when it made the round with investors and bankers, but its revenue at the time was under $250 million and streaming video was far from mainstream. A decade later, BAM is on pace to earn $900 million and it's been turning a steady profit. And so it's really interesting to think about MLB for the longest time, over a decade now, has known that this thing's probably different enough from what we do and serves us as one customer, but is really a horizontal that could serve a lot of customers or in fact be a rights holder itself that we got to

get this thing out of here. But it sort of took until now for them to find the right partner and make it a big enough business on its own to make it happen. And I wanted to get your thoughts on that. Why couldn't they do it any sooner? Yeah. I mean, I think the opportunity here is so much larger than just being the streaming service for major league baseball, but that you actually could build the, the television network of, for the internet. Yeah. Yeah, absolutely. So, but yeah, in terms of, you know, who else do you think could have been, could have been the investor here to, for the spinoff? I mean, we talked why disney was in many ways a perfect fit is there anybody else maybe netflix but like they have so much duplication with netflix like when you think about the the people that are really good at this in the world this sort of video content

distribution right now it's bam tech uh and they historically have been more backend because they sort of, uh, they sort of white label their front end. Um, whereas Netflix really aggregates all users into one front end, but there are differences between that, but the people that are really good at this streaming technology and, and have, uh, all the right agreements and infrastructure in place across all the different, you know, CDNs and everything necessary to distribute this content are BAMTEC, Netflix, Amazon. Yep. Can you think of any others? Maybe Verizon? Well, Twitch obviously is part of Amazon.

And I mean, Verizon is sort of like one layer deeper in the stack when you actually start to go look at the telcos. But they actually own the pipes where this gets distributed. So you can see that being an interesting partner. Yeah. I mean, Google and YouTube. Um, but I, you know, the only, the one that comes to mind for me and I'm sure they must have looked really hard at it. And quite honestly, I'm surprised they didn't, didn't really try to make a run and how bid Disney, because I think Disney probably got a pretty good deal valuation-wise here relative to the potential, is Amazon. And especially with Michael Paul coming over to be the CEO, I mean, clearly he had been thinking about this. But if you look at Amazon, and then they were so prescient in the acquisition of Twitch. And maybe the path that they're taking is that they want to broaden out Twitch and compete directly here, too.

But again, the rights are so important for physical sports. I'm very surprised that Amazon didn't try and make a harder run at buying BAM here. Yeah. And maybe they did. I mean, maybe there was some kind of bidding war. We don't know. I mean, it's not a crazy enterprise value for the spin out, right? If they're generating 900 million in revenue to have sort of a three and a half,

four X multiple on that. I mean, that's really very reasonable relative to other tech company valuations. And I guess the only thing I can think of is that, you know, historically Amazon is pretty cheap when it comes to M&A. And so maybe they just weren't willing to go higher. But I have to imagine, given the huge investment that Amazon has made in video over the last few years, and Bezos talks about it potentially being, he always talks about how he's looking for the fourth pillar for Amazon that's going to be the next big business unit, and that video could be that. Again, I'm very surprised that they let this get acquired by somebody that can threaten them as much as Disney. Yeah. And we're bridging here. Let's

just call a spade a spade and say that we're into tech themes. Tech themes, per usual. Yeah, yeah. I think one thing that I've been thinking about is, did MLB screw up in giving Disney the option to buy the whole thing at some point, or at least buy a majority share? Because you look at the growth of this business and you look at the potential ahead and the very clear wave that they're surfing on in,

in going over the top and actually starting to own a lot of these rights. And at the very least do a lot of the distribution for the, the important content out there for live sports specifically. Like I, if I major league baseball, like, or if I major league baseball shareholders, and this is probably where the nuance comes in,

I would love to own that for the next 20 years and maybe this is all sort of a artifact of the fact that major league baseball is not a publicly traded company it's a i i think i keep saying this i'm pretty sure i'm right because that's the way it is another league it's actually owned by all of the owners of the team it is and so And so maybe you don't have the same sort of investor pressure because a lot of these owners of baseball teams aren't really in the business of owning an asset that needs to appreciate over the next 20 years in a very high growth tech company way. That's just not the business they're in. And if they were going to do that, they are going to invest elsewhere other than their, you know, one 30th ownership in a league.

Yeah. As we talked about it before, there was no way that BAM was going to be able to realize its full potential, you know, being fully owned by, by major league baseball here. Right. But could they have found a partner where like they they weren't at risk of losing the majority of this business? Yeah. But, you know, again, and this I think probably comes down to we weren't privy to the negotiations. But I have to imagine that Disney ended up being the perfect partner and that they're very willing to let Major League Baseball retain a minority ownership stake in the future which even though you know it's not a majority ownership stake but um but they're going to realize be able to participate in the economic benefits here without having to control it and again like we talked about the control structure was definitely hampering hampering bam you know from realizing its potential right i also wonder too like what is maybe there just will be a fantastic return

let's say disney by by takes their option in two years and it's doubled by then or maybe three years and it's doubled by then i mean if it's if it's a seven billion dollar you know seven billion dollar company and disney's buying another valuation like you know maybe mlb is like wow awesome like great we got actually what do they what do they do with that money you pay it as a distribution out to well and again think about you know who who is mlb right like they're a bunch of rich you know people who who own baseball teams right like right what uh they're not you know maybe some of them are tech investors but you know certainly not uh they're not living this and thinking it every day like we are here

unacquired you know and it's it's much older money too than than the nba i um this is going to be actually i'm going to dance forward to follow up and then come back to tech themes here but um my follow-up is going to be boy do i wish i had listened to that bill simmons uh interview with steve balmer before we recorded the last episode and the good news is i'm not like radically changing any of my thinking i think it reinforces a lot of the same points and um but it was just super enjoyable to listen to balmer's incredibly candid and i think that um and bill's obviously an amazing interviewer but you really get a sense of who the owners are in different leagues like in in um balmer says it talks about the nfl but i think the the MLB is the same way.

It's a lot of older money from sort of varying industries that families may have owned the team, things like that. And when you look at the NBA, it's like a bunch of hedge fund managers, investment bankers, tech billionaires. And they're sort of looking at these businesses in a very different way. And I really think that if owning a majority share of BAM Tech as it grows as a tech company through your 130th ownership of Major League Baseball by the nature of you owning a team, it's just not the thing they're optimizing for.

It's a lot of old money. They're not dumb by any means, but it's just not why they own the team. Yep. Totally agree. But then coming back, I have this other question that baseball... So the MLB is growing year over year. It itself, even after the BAM Tech spinout, is a great growing business. And I'm a little bit, I have a little bit of dissonance here because it seems like of all the major sports, baseball seems to be declining. And so, you know, with baseball, the MLB posting record earnings and teams getting more and more valuable. In fact, the average Major League Baseball team is more valuable than the average NBA team. The sport itself doesn't seem to be growing.

So I'm a little bit, maybe listeners can help us out with this in the Slack and we can talk about it as feedback in the next episode. But I'm trying to figure out why I feel like baseball is less prevalent in my generation than it was in my parents' generation. And yet the teams continue to appreciate and value and are even more valuable than other sports leagues. Yeah, without being an expert on this by any means, you know, my hypothesis would be that there really is a difference here between the game on the field and innovation and interest growing or waning there and business model innovation. And this is, you know, we talked about this on the Clippers episode and the NBA has their own streaming tech

with League Pass that maybe they will, you know, think about outsourcing to BAM Tech or selling the rights to BAM Tech in the future. But I think it's this business model innovation and developing, again, collapsing the middleman, taking an internet-based business model approach and developing a again, collapsing the middleman, taking an internet-based business model approach and developing a direct relationship with your customer, a direct paid subscription relationship with your customer. That's probably accounting for a lot of the increase in value here.

Yeah, I agree. Do you think that Disney is going to take their option in the next couple of years and buy another third? I mean, I don't see how they don't, right? Um, I mean, I guess we're, this is bleeding into grading a little bit, but working on through this episode, uh, both in our discussions and the research, you know, kind of had this aha moment. Like we talked about when we were introducing the episode that we're talking about here is the future of television. We're not talking about just sports. And that is so core to everything that Disney is. I mean, their cable networks division and which is of which ESPN is the crown jewel has been the vast majority of the profits, the EBITDA and accounts for the vast majority of the market cap of the entire Walt Disney Company for the past

20 years. Yeah. So then I'll pose this to you. So if BAM Tech, so you say it's all about television. Well, television is a bundle of live and pre-recorded content. So let's say that the cable bundles in X number of years don't exist or are unimportant. For Disney, BAMTEC is their replacement for live. Rather than selling into the bundle and taking a carriage fee, Disney is able to put all their live content directly through BAMTEC. Right now, all their pre-recorded content is locked up in deals with Netflix and others. And I think those go through 2019, 2020. Will Disney renew those agreements with those other content aggregators and keep all of their non-live content going out through those channels? Or are they going to try and

build a direct-to-consumer offering through BAMTEC where they're actually a portal and they're aggregating live or bundling live and non-live together in a way that consumers want going direct to the content owner. Yeah, this is super interesting. And we were alluding to this at the end of History and Facts, but I think this is the question, right? My mind is coming back to superior consumer experiences here. And I wonder if there is some danger in the path that Disney's taking here from a consumer perspective that are they just recreating that cable bundle online and doing it with better economics for themselves. But what consumers hate about cable, right, is you get all this, you have to pay for all the stuff you don't want, you know, it's a much better experience really in the current world that we live in for consumers,

where you can choose, you know, Hey, if I care about baseball, I'll subscribe to baseball. If I care about basketball, I'll subscribe to league pass. You know, if I care about movies, I'll subscribe to Netflix and TV shows. Are we going to see a rebundling here that actually would be negative for consumers? Well, it's like that Jim Barksdale quote, right? There are two ways to make money in business. You can unbundle or you can bundle. And I mean, I really think like if your entire business strategy is read what consumers will want in the next five to 10 years and unbundle or bundle appropriately, if you can execute on that, you're going to

do well. And right now, what consumers want is unbundling. But big open question to when all the content is too disparately scattered around everywhere and we have you know like you remember like 10 years ago when every network had their live tv or their like like abc had lost available to watch on abc.com and some other company you know nbc had the office available on nbc.com and like it took hulu and then netflix and like these rebundling all this content back together in a way that you want to view it. Maybe right now what we want is unbundling and to be able to nicely, um, get content directly from the source. But at some point we're going to have fatigue of that and there's going to be a

rebundling and who's going to do that. How many subscriptions are you going to have? Do you really want to pay Netflix and MLB and league pass and, and, and, or could a really compelling, you know, I don't know, $20 a month, $30 a month, $40 a month package from Disney that includes all of that. That could be very compelling as well. Yep. All right. Let's grade the thing. Let's do, uh, before we do one quick tech theme, I wanted to tack on, we've talked about this so many times in other shows, but I just think this is another really good example of a kind of lesson for me, uh, in terms of building companies and, and for entrepreneurs, bam started by solving a real problem. They didn't start out by trying to invent the future of television. They started out with like the teams needed websites and they

solved that problem poorly at first and then better. And then the problem was, you know, a lot of fans in Japan wanted to see Ichiro and they solved that problem poorly at first and then better. Um, you know, and then the problem was, well, there are a whole bunch of other, you know, folks on the internet that folks that have live content that want to stream it on the internet. And well, BAM had a good solution to that problem. And then it was consumers wanted a new way, a new relationship to sports and wanted to have the final reason to cut the cord. And BAM solved that problem. And I think it's just a great example of stair-stepping your way up into an enormous company by solving real problems kind of one at a time.

And the counterfactual to that, or more just the counter ethereal to that is, yes, it's a really great way if you want to become a platform to solve one problem first and then figure out what under there you can serve other people by doing. But boy, do you have to make sure you don't get into a vertical or versus horizontal mess there and then be both a services provider and care about your own core business that utilizes the services provider and this is like this is i don't think we anticipated this being a theme when we started acquired but boy has it sure become one especially hot on the heels of the oculus episode absolutely interestingly enough like it doesn't really seem to be an issue in this case. Major

League Baseball isn't trying to hamstring BAM Tech by not allowing BAM Tech to serve Major League Baseball's competitors. And until now, it made tons of sense for BAM Tech to prioritize or for BAM to prioritize the needs of MLB because that was an early customer. And so with this spin out, I mean, it's really like a great way to solve for that problem. And I hadn't quite thought about it. I mean, you've been right to be asking this question

and bringing it up throughout the episode. I think this might be why the deal took a year to get done. You know, they announced that they're going to spin it out in August of 2015. The Disney deal doesn't happen until August of 2016, man, that must've been such a negotiating process to wrangle all 30 owners and, uh, get everybody's interests aligned here. And I'm sure not everybody, you know, Ben is going to take the rational, you know, thoughtful approach that you just out, you know, laid out about why this should be a horizontal play, not a vertical play. Yeah.

Well, it seems like they've got the incentives lined up right now, especially if Disney in pretty short order here buys the rest of it. And then it's really a non-issue. Yeah. All right. Should we grade it? Yeah. So listeners, David and I were having a debate before this show over iMessage of whether we were going to grade, whether this episode was going to be grading the spin out or grading Disney's minority investment with the option to buy a majority share later.

And I was kind of pushing for like, well, I think the thing that's fairly well understood is the spin out and it's highly speculative to talk about the future purchase but like the spin out is so clearly like i i'm david and i were like uh no brainer like that's an a that's a great decision why wouldn't the part of major league baseball to spin it out yeah like they they totally would have hamstrung that thing by keeping it in house and it's just like value destruction to to not spin the thing out so we've decided is we're we're gonna grade it um from from the disney perspective which i actually david i want to hear your thoughts first on that okay i'll go first i i i think this is an incredible acquisition by disney you know we're somewhat hamstrung in, in grading it, um,

uh, as thoroughly as we would like, given that we don't know exactly how much revenue is coming along with BAM tech versus staying with major league baseball. But let's just say for, for argument's sake, sort of the latest number we have is, is kind of 900 million in revenue. And, and of course they have to pay a lot for rights to go along with that revenue. But still, they're essentially paying, what is that, for $3.5 billion enterprise value, call it four times, just under four times revenue for this. Think about that relative to the multiples that we typically see in the technology space. That's very low. And then think about that relative to the multiples that we typically see in the technology space, that's very low. And then think about that relative to the massive opportunity that Disney has here to really have a have a credible shot at building the future of long form video customer relationships on the Internet.

This feels like a great purchase to me. And then I also wanted to think about this through, if you go back to some of our earlier episodes on Disney, you know, Pixar and Lucasfilm and Marvel, we talk a lot about the Disney flywheel and, and the playbook that, that Walt Disney, you know, so many years ago laid out that, um, really was the, the forefather of, of the Bezos flywheel and how Disney is going to be able to take all of their other activities and pieces of content that they have throughout the rest of the company and start to push it through this direct customer relationship that they've now just acquired for the first time,

really, in company history. And I think the potential is enormous here. So both... Is it a direct customer relationship? Like BamTech doesn't have any audience. Well, BamTech doesn't have any audience, but they're managing the subscription for relationship with the consumers.

So consumers are paying them both for MLB.TV and NHL and anything they do in the future now, right? Oh, yes, I see. But in a sil and anything they do in the future now right oh yes i see but on a in a siloed basis yeah yeah right like they don't they don't necessarily have some consumer eyeball portal where disney can plug their content in and get that distribution no bam tech itself isn't a consumer portal but through through it, Disney, Major League Baseball and the NHL, and now Disney can operate a direct consumer relationship where consumers are paying them a subscription for the content that, that in the past, Disney had to mediate everything through, you know,

whether that was Comcast or movie theaters or Apple or Amazon or whomever. Now there's finally a vehicle that consumers can, can, you know, over the internet, just pay, pay Disney directly. Yep. And I think it's a brilliant hedge by Disney. I mean, I think I'm assuming you're driving in an a there. Oh yeah. Uh, I said everything except the actual grade. Yeah. Hey, this is, this is a, I predict we'll go down as one of the most important, most transformative acquisitions in Disney history, of which we have already covered several that they've done. And it's only in process. We'll have to revisit this when they buy the rest of it. Yeah.

Yeah, I think I agree with you. I also I'm giving it an A. And I think the biggest thing is their mastery of positioning. To me, it's sort of a hedge, like it's a hedge that, oh, what if cable bundles decline? But like cable bundles are going to decline. They already know that they don't currently own their highest value content, and that will come in the future. And that will come through a lot of the rights that that BAM tech already owns. And that this is a bet on whatever their future content and this distribution

mechanism to go direct to consumers is. Yep. And then one last thing I throw in, it's kind of been a while here on Acquired since we've talked about the people aspects of acquisitions, which going back to our early shows, we focused so much on it. And so many of our guests talk about all, you know, BAM Tech as an organization has this history of operating within a, you know, not as a startup, as a part of a much larger conglomerate, which it now will continue to as part of Disney. So I wonder if, you know, a lot of times you see startups get acquired by a large company and then, you know, the mojo gets lost and, you know, equity compensation isn't as

much as it once was in this case, there's going to be more equity compensation and probably a more innovative culture that BAM tech will be joining versus, versus, you know, baseball. Um, so I wonder, I wonder if from a people standpoint, the company is also well positioned to succeed here. Yep. I think that's right. Okay. Should we move on to follow-ups? Yeah, let's do it. So I mentioned it earlier. I'll just call it out one more time. Um, if you liked the last episode or you want to hear more, or you just want to hear from a very honest and clear thinker about the current state of the NBA and how he operates his basketball team, go listen to Steve Ballmer on the Bill Simmons show. Uh, yeah, it's a great episode. And, uh, um, you know,

hear him say, uh, unfortunately he doesn't do a, um, doesn't do a, uh, you know, head coaches, head coaches, head coaches chant, but the, the classic, uh, the classic bomber enthusiasm is, is on display as always. Yeah. A bunch of real quick ones for me a whole lot has happened in the last couple weeks we won't analyze any of these but just to list out and and would love to jump in the slack and chat about them with folks uh some of this has already been talked about in the slack apparently a lot of publishers are now abandoning facebook instant articles for a whole bunch of reasons uh two, to Microsoft is killing wonder list. Very, very sadly, it is my to-do list app. I love it. And I'm bummed that it's, it's going away.

Uh, three Instagram is on fire. Uh, growth is just continues to accelerate. They passed announced that they passed 700 million MAUs, um, this past week, which is, you know, they're, they're starting to rival, you know, the same size as, as the parent company as Facebook. Yeah. I mean, Instagram is just crushing it at being Snapchat. Nobody does Snapchat better than Instagram. Next the Echo look. So Amazon announced an actually big shout out to, to our good friend Zoe, uh, in Seattle who had a big role in playing and developing the echo look. So now you can not only talk to Alexa, but Alexa can watch you in your home. And, uh, I don't know, I can't decide

if it's creepy yet or awesome. Probably both. As with everything, I mean, as with everything, you know, as i record this episode uh in my apartment in capitol hill in seattle like my alexa is listening to the entire thing so um listeners uh if you're at amazon and um you know you have the encryption keys then uh you get a first look at this episode at first look at the episode right which they don't um you know yeah we we're just joking but it is one of those things like it i think a lot of people will think this seems creepy right now but i bet it will be surprised at how quickly it becomes normal yeah next two more real quick ones one uh cloud era priced their ipo yesterday

at 15 a share enterprise value market cap of of about just under two billion um which is sort of flat from their, well, actually it's half of their last private raise, but the last private raise was more of a secondary that Intel did. So big enterprise IPO happening. And then finally- Which is what, the fifth or sixth of this year, the march goes on.

Yeah, the march goes on. The IPO window is open. And then finally, follow up on our Uber Didi episode. Obviously, there's been lots of Uber news over the past couple of weeks, but Didi yesterday raised $5.5 billion in the largest private company fundraising round ever. $5.5 billion in one fundraising round, man, if, um, you know, if you are on team Uber and you thought that, uh, we talked about this on the show with, with Brad stone, but if you thought that, uh, doing the quote unquote merger with DD meant that the war was over, you know, and you didn't have anything to worry about, like, guess again, the DD giant is, and this 5.5 billion dollars specifically was raised to expand internationally dd is is

coming and gunning to be a competitor to uber and everyone else in the space so watch uh watch what happens in the future yep carve outs carve outs okay real quick uh i have a real quick carve out that will take many hours to read and I'm still not done. But the latest Wait But Why was months in the making and is just fascinating. All about the new Elon Musk company Neuralink that Wait But Why refers to as the quote wizard hat. I won't even get into it here, but it's very worth reading and very thought provoking. I feel like Elon companies at this point are like the blockbuster hit of the summer like like coming it's like the new star wars movie yeah it's all it's all coming full circle here it is and well you chose one that is

largely about the future of humanity and incredibly important mine Mine is quite trite, but fun. So the New York Times operates a Twitter account called the NYT4thDownBot, NYT4THDownBot. And it basically crunches a whole bunch of numbers. And I'm sure I haven't really looked into the... These days, I just assume something has a data scientist doing machine learning behind it. And that is just like, oh, yeah, well, everything that involves data is surely machine learning now. But basically, it's really just a man behind the curtain. Yeah. Somebody applying 20-year-old mathematics and statistics to pop this out. But basically, it tweets for every NFL game what decision they would make on fourth down and it is awesome because there's this non-data driven basically there's this trope

going around that uh nfl owners play it safe and punt because that's the accepted wisdom and they don't want to risk it and go for fourth more often than is generally accepted go go for it on fourth down rather than punting or going for a field goal more often than is generally accepted uh go go forward on fourth down um rather than punting or going for a field goal um more often than is commonly accepted because they will uh if they fail faith face the wrath of of fans and and uh potentially the owner which we were lamenting on the last episode and in the slack right but you know but if you if you quote unquote money ball it and if you really you know look at all the data that you possibly can um coaches should go for it on fourth much more often than they do and so the this uh this is a live uh actually working bot that analyzes

every nfl game and every decision on fourth down so i followed it it's a fun uh so great and actually uh i saw it and found out about it. You might have too in the Slack. So thank you to everyone for posting about it. Yeah, yeah. We want to thank our longtime friend of the show, Vanta, the leading trust management platform. Vanta, of course, automates your security reviews and compliance efforts.

So frameworks like SOC 2, ISO 27001, GDPR, and HIPAA compliance and monitoring, Vanta takes care of these otherwise incredibly time and resource draining efforts for your organization and makes them fast and simple. Yep, Vanta is the perfect example of the quote that we talk about all the time here on Acquired, Jeff Bezos, his idea that a company should only focus on what actually makes your beer taste better, i.e. spend your time and resources only on what's actually going to move the needle for your product and your customers and outsource everything else that doesn't. Every company needs compliance and trust with their vendors and customers. It plays a major role in enabling revenue because customers

and partners demand it, but yet it adds zero flavor to your actual product. Vanta takes care of all of it for you. No more spreadsheets, no fragmented tools, no manual reviews to cobble together your security and compliance requirements. It is one single software pane of glass that connects to all of your services via APIs and eliminates countless hours of work for your organization. There are now AI capabilities to make this even more powerful, and they even integrate with over 300 external tools. Plus, they let customers build private integrations with their internal systems.

And perhaps most importantly, your security reviews are now real-time instead of static, so you can monitor and share with your customers is ready to automate compliance and streamline security reviews like Vanta's 7,000 customers around the globe and go back to making your beer taste better, head on over to vanta.com slash acquired and just tell them that Ben and David sent you. And thanks to friend of the show, Christina, Vanta's CEO, all acquired listeners get $1,000 of free credit. Vanta.com slash acquired. All right, well, listeners, that is all we've got for you today. Thank you so much, as usual,

for joining us. And if you've been a longtime listener or if you're just joining us, we would love a review. Seriously, if you've got two minutes right now

and you're bored on your phone and you have, you're trying to decide what app to open next, please open, actually, it's actually not iTunes reviews anymore. We're technically on Apple podcasts. So, you know, open up Apple

podcasts and, and, uh, leave us a review and thanks so much. We, uh, we'd love for you to join the Slack and help us decide how to pick the next episode. We will likely continue on kind of the sports tech trend for, uh for maybe one or two more episodes. And then there's plenty of other great stuff to cover. So. Oh, yeah. Plenty. Plenty.

Plenty. It's an embarrassment of riches over here at Acquired. Thanks, everyone. We'll see you next time.