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Disney's ESPN and DraftKings near agreement as views on sports gambling change

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Walt Disney-owned ESPN is nearing a major new partnership with sports betting company DraftKings, according to people familiar with the matter.

The deal would pave the way for media giants to capitalize on the growing wave of legalized sports betting, said the people, who asked not to be identified because the negotiations are private. The structure and details of the were not immediately apparent.

DraftKings shares rose 8.8% on Friday, ignoring the broader market downturn. The stock has fallen about 39% so far this year, and the company is valued at about $7.5 billion. Disney was down 2.1% as of 9:49 a.m. New York time.

Bloomberg Intelligence analysts Brian Egger and Geetha Ranganathan said the partnership “makes strategic sense”. “Licensing EPSN’s brand to sportsbooks and integrating betting odds into its broadcasts could help both companies broaden their audience.”

ESPN declined to comment. A DraftKings spokesperson said the company has a “great long-term relationship with ESPN,” but didn’t mention conversations with other companies.

Media companies are looking for ways to profit as more states legalize sports betting. Many TV networks have seen a flood of advertising revenue from sportsbooks competing for bettor registrations.

ESPN has already invested heavily in sports gambling, but has yet to dabble in actual betting. The station has betting-related programs such as: daily wager Through marketing agreements with DraftKings and Caesars Entertainment Inc., links to sportsbooks will be integrated into ESPN’s website. Disney also acquired a stake in DraftKings as part of its acquisition of Fox’s entertainment assets in 2019.

Disney and gambling

In a recent interview, ESPN chairman Jimmy Pitaro told Bloomberg that the sports media giant wants to “take the friction off” for bettors.

“We know that sports fans are not only craving more sports betting content, but the ability to actually place bets in a seamless way from their online digital sports experience.

Disney has been searching for a major sports betting partner for ESPN for over a year, seeking as much as $3 billion for an extended deal.

Since then, the stock market has reassessed the valuation of sports betting operators. For example, Barstool Sportsbook’s parent company, Penn Entertainment Inc., has lost more than half of its value. Large companies such as Caesars and Wynn Resorts Ltd. are cutting marketing costs as their businesses continue to lose money.

As a company known for characters with wholesome families like Mickey Mouse and Snow White, Disney has long avoided gambling. The Burbank, Calif.-based company has refused to put casinos on cruise ships or license characters to slot machine makers. But with the explosion of sports betting across America, that attitude is starting to change.

Disney Chief Executive Bob Chapek told Bloomberg last month that ESPN is important to Disney’s overall vision of deepening its direct connection with consumers.

“Sports betting is part of what young sports viewers, say under 35, want as part of their sports lifestyle,” Chapek said in that interview.

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