It's no secret that Facebook, Inc. (Nasdaq: FB) is making a major push into the streaming video market. However, the company's newest deal with Major League Baseball is the latest sign that Facebook could soon be a major disruptor in the live sports business as well.
Last week, Facebook announced a new deal with MLB to exclusively stream 25 weekday afternoon baseball games this season. Although Facebook didn't disclose the value of the deal with MLB, Bloomberg reported the deal likely cost Facebook between $30 million and $35 million. The MLB deal marks the first time Facebook will have exclusive streaming rights to content from a U.S. major professional sports league.
Facebook has quietly been testing the sports market waters in recent quarters. Last year, Facebook had a deal with Twenty-First Century Fox (FOXA) to stream UEFA Champions League soccer. In addition, Facebook had non-exclusive rights to stream 20 MLB games last year. Facebook had a deal in place for exclusive streaming rights to 47 U.S. smaller-conference college basketball games this season. In December, Facebook signed a deal with World Wrestling Entertainment (WWE) for exclusive weekly sports entertainment content.
The past two years, Facebook made bids for the National Football League's Thursday Night games but failed to close the deal either year. Last season, Amazon.com (AMZN) carried the Thursday night games.
GBH Insights head of technology research Daniel Ives says sports fans and investors should expect Facebook to be a major player in streaming sports in coming years.
"We believe original content programming spend could approach between $1 billion to $1.5 billion over the next year for Facebook, with a sizeable portion of this dedicated to live sports programming rights for various NCAA, MLB, potentially NFL events and other international events," Ives says.
Ives says Facebook, Amazon, Netflix (NFLX) and any other company looking to make a play on sports streaming is under pressure to establish an audience ahead of the upcoming launch of The Walt Disney Co. (DIS) ESPN Plus standalone streaming service, which is expected to be available for $4.99 per month within weeks.
"The Disney/ESPN launch of ESPN Plus over the coming year will be at the epicenter of [Disney CEO Bob] Iger's master streaming initiatives and raise the stakes for securing future sports content," Ives says.
GBH Insights has a "highly attractive" rating and $225 price target for FB stock.
