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Disney's (DIS) ESPN+ Buys Bundesliga's U.S. Rights Till 2026

Zacks Equity Research

Reportedly, Disney’s DIS ESPN+ sports streaming service has bought the U.S. rights of Bundesliga, Germany’s top soccer league, for the 2020-2026 season. Notably, the league has 11 American soccer players, higher than any other top European league.

Per a Reuters article, the tenure of the deal, beginning August 2020, is a year longer than the previous agreement with Fox Corporation FOXA. This has been done to coincide with the run-up to the FIFA World Cup, which is set to be hosted by the United States along with Canada and Mexico in 2026.

Bundesliga’s popularity is expected to expand the user base of ESPN+, which currently has more than two million subscribers. According to Forbes, which quoted a study by the CIES Football Observatory, Bundesliga was the most followed league globally, trailed by the English Premier League and Spain’s La Liga, between 2013 and 2018.

The deal strengthens the ESPN+ content portfolio amid increasing competition in the streaming space. Notably, Disney expects the paid subscriber base of ESPN+ to grow to 12 million by the end of fiscal 2024.

Disney’s Streaming Investments to Hurt Profitability

Disney is set to proliferate the rapidly-growing video streaming market, which is currently dominated by the likes of Netflix NFLX and Amazon prime video. The company is hell-bent on making its upcoming Disney+ streaming service a hit.

Disney is set to launch (Nov 12) Disney+ at $6.99 a month and a Disney+, ESPN+ and Hulu bundle for $12.99 a month. The company is banking on its latest box-office hits like Avengers: Endgame to attract subscribers.

Per a CNET article, Disney+ will offer users four simultaneous streams, including videos with 4K, UHD and HD picture quality, and seven different user profiles at no extra cost.

However, in terms of pricing, it is expected to face significant competition from Apple TV+, Apple’s AAPL streaming service, which is set to launch on Nov 1. Notably, Apple TV+ will be available on the Apple TV app on iPhone, iPad, Apple TV and other platforms for $4.99 a month.

Moreover, Disney’s profitability is expected to be hurt by investments toward the consolidation of Hulu, and in ESPN+ and Disney+.

For fourth-quarter fiscal 2019, the company expects the Direct-to-consumer & International segment to report roughly $900 million in operating losses, indicating a year-over-year increase of almost $560 million.

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