Disney’s Mega-Deal with Fox Includes DraftKings Stake
In March, a Disney-Fox merger took place in which the Walt Disney Company absorbed 21st Century Fox. This $71.3 billion merger subsequently saw iconic intellectual property like “The Simpsons” and “X-Men” change hands. Buried amidst the more high-profile details of the massive Disney-Fox merger was the fact Disney now owns a stake in daily fantasy sports (DFS) kingpin DraftKings.
So says Legal Sports Report, after the gaming industry news outlet confirmed last week that Disney’s deal with Fox included the latter’s 11 percent equity stake in DraftKings.
Massive Disney-Fox Merger
Back in 2015 – when the DFS “boom” was in full swing – FOX Sports paid $300 million for a piece of the Boston-based DraftKings as part of a Series D funding round. And interestingly enough, one month before that investment was made, Disney was reportedly interested in obtaining DraftKings equity via a $250 million investment.
The proposed deal ultimately fell through, but four years later, Disney has indeed made its entrance into the gambling marketplace.
Disney CEO Recently Disavowed Gambling
The DraftKings development would seem to stand in stark contrast to comments made in February by chief executive officer Bob Iger.
Speaking to investors during an earnings call, Iger offered the following lukewarm take on the prospect of Disney capitalizing on the regulated sports betting industry:
“I don’t see The Walt Disney Company, certainly in the near term, getting involved in the business of gambling, in effect, by facilitating gambling in any way.
I do think that there’s plenty of room, and ESPN has done some of this already and they may do more to provide information in coverage of sports, as for instance, that would be relevant to and of particular interest to gambling and not be shy about it, basically being fairly overt about it. But getting into the business of gambling, I rather doubt it.”
As Iger pointed out, Disney subsidiary ESPN has dabbled in gambling for several years now, integrating both traditional sports betting and DFS statistics into its coverage. And along with the proposed $250 million funding bid, Disney and ESPN already did direct business with DraftKings in 2016 via a short-lived exclusive advertising deal.
Nonetheless, Iger’s caveat about “facilitating gambling” likely distinguished between advertising and actual investment in a company like DraftKings’ operational side.
Speculation over Disney’s eventual plans for its DraftKings stake has swirled since the deal was announced, and pundits have proposed that a sale could soon be in the works.
Until that happens, however, Iger’s doubts about Disney facilitating gambling “in any way” no longer hold water. In addition to its dual dominance – alongside chief rival FanDuel – over the DFS market, DraftKings has made major inroads in New Jersey by becoming the runner-up (to FanDuel) in terms of online sports betting revenue.
DraftKings Might be Moneymaker for the Mouse
The Disney-Fox merger and the acquisition of 21st Century Fox didn’t include FOX Sports and its related IP, though. That portfolio now includes the FOX Bet online sportsbook following a deal with The Stars Group announced earlier this month.
Even so, Disney’s newfound connection to DraftKings could be quite lucrative for both companies going forward.
DraftKings is already a powerhouse within New Jersey’s statewide sports betting and online casino scene. After becoming the first online / mobile sportsbook to launch there last August, DraftKings Sportsbook has propelled local license-holder Resorts AC to more than $50 million revenue.
The company also operates brick and mortar sportsbooks in New Jersey and Mississippi, and online / mobile platforms in West Virginia and Pennsylvania are in the works.