Barely more than a month old as a public company, DraftKings (NASDAQ: DKNG) may already be considering an acquisition in the form of Turner Sports’ Bleacher Report unit.
The rumor was initially reported by Front Office Sports late Tuesday, with Turner, a unit of AT&T (NYSE:T), saying it has no interest in divesting the popular sports media property. DraftKings doesn’t comment on market speculation.
The report surfaced after DraftKings stock posted one of its best intraday performances since its April 24 initial public offering (IPO), soaring more than 14 percent on Tuesday. That high-flying stock could make an acquisition easier to digest for DraftKings, which isn’t yet profitable.
An acquisition of a content platform like Bleacher Report makes a ton of sense for DraftKings, especially if they can take advantage of using their high-priced stock as currency for a buyout,” said Roundhill Investments CEO and co-founder Will Hershey in remarks emailed to Casino.org.
It’s unclear what level of discussions, if any, took place between DraftKings and Bleacher Report. Turner acquired the latter in 2012 for $175 million,
Deals between gaming companies and sports media properties is an idea that’s rapidly gaining traction in the booming US sports wagering industry. Earlier this year, Penn National Gaming (NASDAQ:PENN) doled out $163 million for a 36 percent stake in Barstool Sports, an agreement that could pave the way for the Hollywood casino operator to eventually own David Portnoy’s company outright.
Soon after, William Hill and CBSSports.com announced a partnership of their own. Hershey sees the Penn/Barstool arrangement as potentially serving as a template for other companies.
“The online sports betting industry is in a hyper-growth stage, and acquiring media assets to improve one’s lead generation strategy can be a competitive advantage,” he said. “Penn’s acquisition of a stake in Barstool Sports was similar in many ways. It’s all about building a ‘top of funnel’ to onboard new users.”
As a web-based property, Bleacher Report caters to the younger demographics gaming companies are eager to win over, and the media site is a growing part of Turner’s MLB, NBA, and PGA coverage. Bleacher Report also airs gambling-related shows from Caesars Palace on the Las Vegas Strip, so the company already has some sports betting exposure.
Bleacher Report became an AT&T property via the telecom giant’s $108 billion purchase of Time Warner in 2018. Due in large part to that deal, AT&T carries a massive debt burden of $164.3 billion, of which $147.2 billion is long-term, and is under pressure from some investors to sell assets.
Reports recently surfaced that AT&T could sell DirecTV, which it acquired in 2015 for $67.1 billion. Additionally, in his frequent social media bashing of CNN, President Trump often floats the idea of AT&T parting with the cable news network.
Though AT&T management is committed to selling $10 billion worth of assets this year, it’s not immediately clear what businesses could be divested, and if Bleacher Report could fetch a compelling enough price tag.