Rumors

DraftKings Reportedly Mulling Bleacher Report Takeover

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.

Rumors are flying DraftKings could make a move on Bleacher Report, which airs shows from the Caesars Palace sportsbook. (Image: Los Angeles Times)

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,

Deal Makes Sense

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.

Where AT&T Comes Into Play

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.

Todd Shriber

Gaming Financials, Casino Business----Todd Shriber got his start in financial markets as a reporter with Bloomberg News. Later, he became a trader at a Southern California-based long/short hedge fund, where he specialized in trading sector and international ETFs leading up to and during the financial crisis. Currently, he analyzes, researches, and writes on ETFs for a variety of Web-based publications and financial services firms. Shriber has been quoted in Barron's, CNBC.com, and The Wall Street Journal. His work has been published on sites such as Benzinga, ETF Daily News, ETF Trends, MarketWatch, Fox Business, and Nasdaq.com. He joined the Casino.org news writing team in 2019, and lives in Southern California, where he enjoys golf and taking his black lab to the dog park. When in Las Vegas, he likes to wager on college football, the NBA, three-card poker, and roulette, even though he knows better. Email: todd.shriber@casino.org

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Todd Shriber