Disney: A Stream Is a Wish Your Heart Makes

It's been a year since Walt Disney (NYSE: DIS) shelled out $1 billion for a minority stake in BAMtech, and now it's putting all of the pieces together. The media giant revealed on Tuesday afternoon that it's investing another $1.58 billion to bump its stake in BAMtech up to 75%. With that move, it will use the streaming platform to roll out ESPN and Disney services.

A dedicated ESPN streaming service should be up and running by early next year. A broader Disney-branded offering should launch in 2019, just as its distribution deal with Netflix (NASDAQ: NFLX) expires.

Shares of Netflix naturally opened lower on Wednesday following the news. Disney shares also opened lower, though perhaps more so because of its ho-hum quarterly report than the implications that its new approach will be too risky. However, history may still ultimately view this as a lose-lose deal. Let's go over the two big reasons why Disney may be biting off more than it can chew.

Source: Fool.com