By Tim Baysinger
NEW YORK (Reuters) - Discovery Communications Inc (O:DISCA) and video-streaming firm BAMTech will form a joint venture to provide back-end technology for content owners, broadcasters and other platforms throughout Europe, the companies said on Tuesday.
Eurosport Digital, Eurosport's website and subscription based streaming platform, will be the initial client of the joint venture, called BAMTech Europe. Discovery acquired full ownership of Eurosport last year. BAMTech is the digital arm of Major League Baseball.
Terms of the joint venture were not released.
BAMTech, which was spun off from MLB Advanced Media, has a significant footprint in the United States, serving 7.5 million paid subscribers with its U.S.-based clients' so-called over-the-top (OTT) streaming services, including the NHL and Time Warner Inc's (N:TWX) HBO.
Discovery and other media companies are struggling with "cord cutting" consumers who abandon large bundles of channels sold by cable TV providers.
With Discovery holding a large footprint in the European sports market, David Zaslav, Discovery’s president and chief executive, sees the deal beneficial to both companies.
“We think we can help (BAMTech) build a platform business in Europe,” he told Reuters. “They’ve got a lot of knowledge in the direct-to-consumer business.”
Unlike the United States, where 85 percent of homes subscribe to pay-TV, only about half of Europe’s 740 million homes count themselves as TV subscribers, said Zaslav.
Discovery reaches most of those paid-TV subscribers but that still leaves another 370 million potential customers, the executive said.
Discovery has focused on building out Eurosport’s digital businesses, which include Eurosport.com and its subscription-based OTT platform, Eurosport Player. In September, Discovery brought Ralph Rivera from the BBC on board as managing director for Eurosport Digital.
Walt Disney Co (N:DIS) said in August it was buying a 33 percent stake in BAMTech for $1 billion to allow it to sell more content directly to consumers. [n:nL4N1AQ4S2]
Zaslav said it will take around six months for BAMTech to be fully implemented within Eurosport Digital, at least four to six months prior to the PyeongChang (South Korea) Winter Olympics, which begin in February 2018.
Discovery on Tuesday also reported a 22 percent slide in third-quarter earnings, hurt by at $50 million after-tax impairment charge related to its investment in Lionsgate
Shares of Discovery were 1.6 percent lower at $25.70 in afternoon New York Stock Exchange trading.