As the FIFA World Cup 2022 unravels, synonymous with one of the busiest periods for the sports betting industry, ESPN Chairman Jimmy Pitaro stated Wednesday he does not anticipate an imminent sports wagering deal, thus clouding expectations for timing of a potential tie-up with DraftKings.
As reported by Bloomberg, a month after ESPN seemed to be nearing a large new partnership with DraftKings, Pitaro now said the network is exploring a deeper push into sports betting and has had talks with “all the usual suspects.” However, the recent return of Bob Iger at the helm of parent company Walt Disney Co. has left many strategic priorities in flux.
During a press conference, ESPN’s Chairman said: “We’re not going to take people’s money; we’re not going to set lines and spreads and odds. But the idea of leaning in a bit more here and creating a more seamless experience is definitely on the table.”
Disney has long held the main goal of protecting its family-friendly image, meaning betting was left off the table, seen as taboo. However, after Bob Chapek took over as CEO in 2020, the company began to search for a major sports betting partner for ESPN, seeking as much as $3 billion for an extended deal. But Chapek’s recent firing and Iger’s return seem to change those plans.
“Bob’s ultimately going to have to dig in with me. We’re going to have to sit down and I’m going to have to walk him through this. I do not anticipate any deals imminent,” Pitaro added.
In 2019, then-CEO Iger told investors he did not see Disney getting into the gambling industry or facilitating it in any way. ESPN’s role, as he said, was providing information. The network has betting-related shows like Daily Wager, as well as marketing deals with DraftKings and Caesars Entertainment, but it has steered clear of taking actual bets.
For the time being, it appears that Iger will play an instrumental role in the question of whether ESPN moves forward with a comprehensive sports wagering expansion plan. Nonetheless, a lot has changed since the last time Iger was in charge. Half of the country has legalized sports betting, and media companies and leagues are now rushing to cash in on the frenzy.
A deal with a sports betting company could also be attractive to Iger, given the financial pressures that Disney is facing. Such an agreement could mean a sports betting company pays for the rights to use the ESPN brand and agrees to buy a certain amount of ads, injecting a boost at a time when other advertisers are pulling back.
According to Pitaro, “there is upside for the ESPN business and we believe there is upside for the ESPN brand." But at the same time, the executive noted "we have to consider things from a Disney perspective as well.”
He also underscored that ESPN would not assume any risk by taking lines on sporting events. If the brand enters the sports wagering space, it will do so through a third-party deal with a sportsbook.
Also at the conference, Pitaro said ESPN “very much” wants to renew its TV deal with the NBA, but will want more flexibility to stream basketball games. He expects any new deal will include a “large direct-to-consumer or digital component.”
As of October 1, ESPN+ platform had 24.3 million paid subscribers, according to the company’s annual report with the U.S. Securities and Exchange Commission, an increase of 42% from the previous year.
The video streaming service offers programming on select lower-tier sports, but does not carry major live events. During Fiscal Year 2022, average monthly revenue per paid subscriber rose modestly to $4.80, up from $4.57 the prior year.
Disney is expected to closely monitor changes in customer behavior from a direct-to-consumer perspective, as its streaming platforms struggle to turn a profit. Last year, Disney’s online platforms and streaming services lost approximately $4 billion, with ESPN+ incurring more than $1.5 billion in programming and production costs, according to the filing.
A comprehensive sports betting platform could provide another mechanism for ESPN to engage with its streaming audience, as live sports is “the single best way to aggregate live audiences,” according to Pitaro.