Walt Disney (NYSE:DIS) is changing its tune on sports wagering in a big way, telling attendees at an investor conference that the company will lean on betting and fantasy sports to bolster its ESPN+ business.
ESPN+ is the streaming platform bearing the name of the “worldwide leader in sports.” Despite that cache, the offering trails stablemates Disney+ and Hulu. Disney’s decision to feature sports wagering content more prominently on the streaming service comes as ESPN is struggling because of cord-cutting and the coronavirus pandemic disrupting the traditional sports calendar.
Last month, the network said it’s laying off 300 staffers and not filling 200 open jobs. In April, some highly paid executives and on-air personalities were asked to take salary reductions to avert layoffs.
Today, the entertainment and media conglomerate described sports wagering as a “key opportunity” and an “important area of growth for the company.”
Disney says sports betting is a focal point for the company, and it’s clear sports fans are gravitating to ESPN+, which, in turn, will introduce many viewers to the world of sports betting,” said Roundhill Investments analyst Matias Dorta.
ESPN+ already has 11.5 million subscribers, and enhanced sports betting offerings could easily help the service eclipse Disney’s goal of 12 million payers by fiscal 2024. Costs weigh on the success of ESPN+. Analysts estimate the average subscriber is paying just $4.50 to $5 a month, but that range should be $40 to $50 for the unit to be profitable.
Writing’s Been on the Wall
ESPN accelerated its exposure to the sports betting space in September, inking separate, multi-year accords with Caesars Entertainment (NASDAQ:CZR) and DraftKings (NASDAQ:DKNG).
Caesars and DraftKings are ESPN’s co-exclusive sportsbook providers, while the latter is the network’s official daily fantasy sports (DFS) partner. ESPN’s Daily Wager betting show is broadcast from inside a studio at LINQ Hotel on the Las Vegas Strip, a property operated by Caesars.
Disney’s plan to ramp up sports betting content on ESPN+ “is great news for DraftKings and Caesars Entertainment,” said Dorta. “Both companies signed sports betting deals with ESPN this year. Disney’s commitment to sports betting and the strong growth of ESPN+ should drive meaningful traffic back to both DraftKings and Caesars.”
California-based Disney, a member of the Dow Jones Industrial Average, owns six percent of DraftKings, a stake the media company acquired via its its $71.3 billion 2019 takeover of 21st Century Fox.
Big About-Face
Disney rapidly accelerating its sports betting exposure represents a quick change of tune for the company. In discussing the DraftKings stake with analysts and investors after the 21st Century closed, Chairman Bob Iger said the plan was to remain passive with the sportsbook operator, and that was unlikely the entertainment company would push deeper into gaming.
“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 that would be relevant to and of particular interest to gambling and not be shy about it, basically being fairly overt about it,” Iger said at the time. “But getting into the business of gambling, I rather doubt it.”
Previously, Disney opposed efforts to expand casino gaming in Florida, where it runs Walt Disney World in Orlando. Neither Florida nor California, home to Disneyland, currently permit sports wagering.
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