Can Disney's $2BN Sports Betting Deal Save the Sinking Ship?
Published August 23, 2023 by Shane
A new deal has been signed by the Disney corporation, and it could be their saving grace after the recent years of massive losses. Soon The Walt Disney Company and gambling will go hand in hand.
For many years, The Walt Disney Company was the shining example of family-friendly, squeaky-clean, and very profitable entertainment. No one could touch what Disney and its animal cohorts could bring to the table.
However, this is no longer the case. After years of creating movies, TV shows, and games that tanked on launch or couldn't hold up to the hype, Disney is starting to feel the losses.
With another abysmal release on the books, the company is turning to other ways to bring in the revenue they need to survive.
ESPN Signs $2 Billion Deal
The Entertainment and Sports Programming Network, better known as ESPN, is one of the largest cable sports channels in the US, and Disney currently owns an 80% share of the business.
In an unexpected turn of events, ESPN recently struck a $2 billion deal with Penn Entertainment, a well-known casino owner. The deal will launch a sports betting business under the ESPN brand and will span over the next 10 years.
ESPN chair Jimmy Pitaro commented on the deal, saying:
"Our primary focus is always to serve sports fans, and we know they want both betting content and the ability to place bets with less friction from within our products. The strategy here is simple: to give fans what they've been requesting and expecting from ESPN. Penn Entertainment is the perfect partner to build an unmatched user experience for sports betting with ESPN Bet."
The company's reach is a big drawcard, with ESPN drawing in over 105 million digital visitors monthly and sporting a massive social media presence. This will also be Magic Kingdom's first foray into the world of online gambling.
Disney is Betting on ESPN
While the House of Mouse has always had a squeaky-clean reputation and sports betting raises more than a few eyebrows, it may be a surprise that Disney signed the deal with Pen Entertainment.
Due to the losses the company has suffered of late and the fact that sports advertising is at an all-time high, it seems that Disney is betting on a sportsbook to save their sinking ship.
Penn Entertainment has estimated that the agreement between them and ESPN will generate long-term earnings of between $500 million and $1 billion annually.
Jay Snowden, Penn Entertainment's chief executive, commented:
"ESPN Bet will be deeply integrated with ESPN's broad editorial, content, digital and linear product, and sports programming ecosystem. ESPN Bet will also benefit from Penn's operational experience, extensive market access, and proprietary technology platform, which successfully debuted in the US this July. Together, we can utilize each other's strengths to create the type of experience that existing and new bettors will expect from both companies, and we can't wait to get started."
The news of the deal sky-rocketed Penn's share price by 20% at the time of the announcement, while rival sportsbooks like DraftKings and Flutter dropped in the wake of the deal being signed.
Massive Losses for Disney
After multiple rounds of layoffs, box office flops that cost the company more than $900 million, and the loss of more than $512 million by Disney+, it's not surprising that the company is searching for a lifeline.
With hefty price increases, the rise of movies that leaned into "woke" culture rather than good old Disney fun, and the restriction of streaming services, Disney+ lost more than 11.7 million subscribers in a matter of months.
The company isn't on the verge of closing its doors just yet, but the expected profits are simply not what they used to be or should be, considering the budgets of the films being released.
In 2022, Lightyear was released with a budget of $200 million and only made a modest $226.7 million worldwide. Other films like Strange World, which had a budget of $180 million, tanked considerably, bringing in only $70 million.
As this trend continues to happen more and more, Disney's saving grace remains ESPN and ABC, which brings in more than 30% of overall company revenue. The addition of this new deal could see ESPN (and sports betting as an industry) save Disney from itself.
