ESPN bets great with PENN in value desired at cutting DraftKings shares
August 10, 2023: On Wednesday, ESPN bets great with PENN in value desired at cutting DraftKings shares. Penn will rebrand its sportsbook, called after Barstool, to ESPN Bet.
ESPN, part of Disney, had previously been reluctant to embrace the highly competitive online gambling industry fully. However, ESPN is shedding cable subscribers, and Disney CEO Bob Iger said in July that the company was open to strategic partnerships with the sports media brand.
As part of the agreement, Penn will pay ESPN $2 billion in cash and stock warrants over ten years to license the brand. Shares of Penn rose 8% on Wednesday.
The move could end a non-exclusive marketing deal that ESPN has with DraftKings. Disney also has an equity stake in DraftKings.
It is possible ESPN could have required DraftKings to drop its brand in favor of ESPN branding, which prevented its hurdles. The PENN/ESPN partnership also raises the question of whether Disney will hold onto its less than 5% stake in DraftKings or look to unwind its position,” MoffettNathanson analyst Robert Fishman said in a note to clients Wednesday.
“Big picture, we will see if this is the first step for Disney to reposition ESPN through new partnerships and even a potential new strategic equity partner that might help ESPN with distribution and content as well as capital to de-risk the asset for the company,” Fishman added.
Disney’s fiscal third-quarter earnings report is due Wednesday after the market closes. The media giant’s stock was down less than 1% ahead of the information.
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