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Exciting New Gambling Deal Could End Disney’s Losing Streak
By Shane Addinall Aug 16, 2023 EntertainmentWhen the Disney corporation looked for a financial safety net to help them recover from the year's ongoing losses, they never banked on being bailed out by gambling. We delve into the exciting new betting and live casino deal with Penn Entertainment.It is no secret that the last few years of the entertainment business have been a disaster for the Disney corporation, with the latest reports by CEO Bob Iger confirming the company has lost $490 million in the last fiscal quarter of the year.
Even their in-house streaming service Disney Plus lost over 20 million subscribers between September 2022 and June 2023. Combined with the company's financial losses in other areas, this has resulted in more than 7000 job cuts, nearly 3% of its total workforce.
Is Gambling Disney's Lifesaver?
In an interesting turn of events, the family-friendly entertainment company could find itself thrown a lifeline from an unexpected source – sports betting. As an 80% shareholder in the American cable sports channel ESPN (Entertainment and Sports Programming Network), the Walt Disney Company stands on the precipice of a significant windfall just when it needs it most.
In a landmark licensing agreement Penn Entertainment, owner and operator of multiple US gaming venues, signed a deal that will see them launch a new betting platform, ESPN Bet.
Reports claim that the deal is worth an estimated $1.5 billion. Penn has agreed to pay ESPN its asking price over a period of ten years, with an upfront assignment of $500 million in stock purchase warrants as a “deal sweetener”.
The announcement saw Disney (NYSE:DIS) share prices jump from $88.13 to $91.76 in less than 48 hours. Penn stock prices saw a similar surge, climbing more than 18% in the same timeframe.
Gambling Platform CEO Bets Big
Penn CEO Jay Snowden confirmed that the product will be a sports betting and live casino site managed by Penn Entertainment. The platform will be able to hit the ground running as it will rebrand Penn's existing gambling products, including websites, mobile apps, and a planned land-based ESPN branded venue.
Speaking of the product launch, Snowden said:
Quote“We’re going for it, we’re certainly not going to be cheap in our approach. We don't wanna have regrets about how we launch the product, about how we launch the brand.”
To maximise the growth of the new product, Snowden anticipates that the company will increase its spending fivefold, the majority of which will be invested in campaigns intended to acquire new customers.
Crazy Barstool Fire Sale Agreement
In a mind-boggling agreement, Penn sold popular betting and media company Barstool Sports back to its founder, Dave Portnoy, for $1.
The official press announcement read:
Quote“Penn sold 100% of the outstanding shares of Barstool to David Portnoy in exchange for a nominal cash consideration ($1.00 dollar) and certain non-compete and other restrictive covenants.”
While the agreement does include a clause that will see Portnoy pay them 50% of the gross proceeds from any future sale or monetisation of Barstool, it is the “non-compete and restrictive covenants” that will be the most valuable to them as they begin to expand the ESPN Bet footprint.
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