ESPN, owned by Walt Disney Co., is set to enter a new partnership with DraftKings Inc., a sports betting firm, as per information from reliable sources.
According to some information from people who asked not to be identified as the matter is private, the new deal would allow ESPN to capitalize on the growing trend of legalized betting. The details of the new partnership structure are not known.
The shares of DraftKings rose by 14% in New York extended trading. This year so far, they have declined 42% till closing on Thursday. The company’s market capitalization jumped to $7.2 billion, while the shares of ESPN showed little movement in late trading.
A spokesperson for DraftKings said they don’t share conversations they have with other companies while noting that they had an excellent relationship with ESPN. On the other hand, ESPN declined to comment on the development.
With many states legalizing sports betting, Media corporations are looking at ways to cash the opportunities. New dollar advertisements are shown on several television networks from sportsbooks asking people to sign up for betting.
ESPN has stayed away from taking an actual betting position despite investing heavily in sports gambling. The media giant has broadcasted betting-related shows such as Daily Wager. They have integrated links with sportsbooks such as Ceasers Entertainment Inc. and DraftKings on the ESPN website under its marketing deals. In 2019, Walt Disney, after acquiring Fox’s entertainment assets, also got a stake in DraftKings.
Eliminate Friction
According to Bloomberg News, the chairman of ESPN, Jimmy Pitaro, said in an interview that the sports channel wants to eliminate friction in betting. He said sports fans want to place bets seamlessly apart from viewing digital sports content. Walt Disney has been looking for a partner for ESPN in the sports betting arena with a $3 billion extended deal.
The stock market has since last year relooked at sports betting operators’ market valuations. Barstool Sportsbook’s parent company Penn Entertainment Inc. has lost more than half its valuation. Other major players, including Wynn Resorts Ltd and Ceasers Entertainment inc., have cut down on their marketing budgets amidst heavy losses in the business.
Walt Disney, a brand known for its family-oriented characters such as Snow White and Mickey Mouse, had long stayed away from gambling. The Burbank, California-based sports media company had refused to allow casinos on its cruise ships or allow its characters to be licensed to manufacture slot machines. However, the attitude changed after an explosion in betting in the sports industry across the US.
Bob Chapek, CEO of Walt Disney, told Bloomberg that ESPN is critical to the company’s overall vision since it connects to consumers directly. He said in the interview that the younger audience under 35 wants sports betting as part of their sports lifestyle.
