Fox Says FanDuel, Flutter Stakes Worth More Than $7.5 Billion

Media giant Fox Corporation (NASDAQ: FOX) estimated the combined value of its Flutter Entertainment (NYSE: FLUT) and FanDuel stakes at nearly $8 billion.

On a Tuesday conference call with analysts to discuss the company’s fiscal second-quarter results, CEO Lachlan Murdoch said Fox’s option to acquire 18.6% of FanDuel is deeply profitable and its stake in Flutter is worth more than $1 billion.

The 18.6% of FanDuel is in the money on current consensus valuation by over $2.8 billion and our 2.5% holding in Flutter, the parent company is worth over $1.1 billion,” said Murdoch in response to a question from Morgan Stanley analyst Thomas Yeh. “So our sports betting strategy has really been very positive for the company and for our register.”

Last September, Murdoch noted that Fox values FanDuel at $35 billion, meaning 18.6% is worth $6.5 billion. Assuming that’s accurate, the media conglomerate’s interests in FanDuel and Flutter combined are worth $7.6 billion or almost a third of the media company’s market capitalization of $24.32 billion.

Fox Working Toward Monetizing FanDuel Investment

Fox’s interest in FanDuel was accrued via Flutter’s 2020 $12.2 billion acquisition of The Stars Group (TSG). Fox sold Sky Bet to TSG in 2018 for $4.7 billion, taking an equity stake in the buyer.

“That process is obviously relatively complicated one, but it’s moving forward. And we expect there to be sort of no significant hurdles with that process, but it will take time,” said Murdoch on the call. “Of course, we’ve given ourselves plenty of time because our option is not due for another — end of 2030. So we’ve given ourselves another, sort of, five years to get through the process, but we would expect to be license very significantly before that.”

He added that Fox is working through the gaming permitting process in 26 states, but he didn’t address state-specific issues.

Fox Has Plenty of FanDuel Options

Murdoch didn’t mention Fox’s plans for its financial interest in FanDuel when it ultimately exercises those rights, but it potentially has several attractive options to consider. The media company’s prior US sports betting efforts failed so it could simply become a long-term passive investor in FanDuel while possibly broadening ties between the gaming company and FOX Sports.

Fox could also gradually unwind its FanDuel investment, generating cash for its media operations and perhaps related acquisitions.

It’s also possible that some or all of Fox’s FanDuel stake could be sold back to Flutter though neither company has commented to that effect. When combining the 18.6% of FanDuel Fox has rights to and the 5% owned by Boyd Gaming (NYSE: BYD), Flutter owns 76.4% of the online gaming firm and could want to increase that percentage.