DraftKings stock jumps on potential deal with ESPN
Yahoo Finance Live anchors discuss the rise in stock for DraftKings after reports surface that the sports betting company is working towards closing a deal with ESPN.
Video Transcript
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JULIE HYMAN: There's one other stock that we want to mention and that's DraftKings, ticker symbol DKNG. The shares are up by about 5% on a report that the sports betting giant may be closing in on a deal with ESPN, as the companies look to capitalize on the growing wave of legalized sports betting. In a statement to Yahoo Finance, a DraftKings spokesperson said, "We have a great, long standing relationship with ESPN. However, we speak to a variety of companies on a regular basis and don't comment on the specifics of those conversations." And indeed, they do have an existing relationship with ESPN, so it's unclear what this agreement could potentially entail, Brian Sozzi.
BRIAN SOZZI: My intel press release on Sunday evening and we're talking about it again on Monday morning, Julie. But look, I think you're seeing with this being floated out there why Disney recently and CEO Bob Chapek pushed back on this notion that they have to go out there and sell the ESPN division. This has been a key integral asset to Disney for some time.
Has it been underutilized? I would argue yes. So I think you are going to see from Chapek over the next 12-18 months is figuring out and figuring out more ways to leverage really the powerhouse name in sports. And gambling is one way of doing it, whether it's integrating it online, integrating it on YouTube, or even just somehow integrating it onto your television screens. This is the next frontier for this brand and it could bring them a lot of money.
BRAD SMITH: One thing that I have to think about with this story is the customer acquisition costs that a company in DraftKings typically takes on. If you even are able to bring on a partner like a Disney that helps you alleviate some of those customer acquisition costs because of the platform that ESPN has and the number of people that go there for different things like just checking scores, or fantasy, or how that can be integrated into broadcasts even, for DraftKings, it's hard not to believe that you wouldn't see an immediate type of boost to the business. Because that is the subscriber base, that is the customer base that you're trying to tap into and have had to do so much advertising on ESPN. And so with that in mind, if you do have some type of partnership between ESPN and DraftKings really come through, look for some of those customer acquisition costs to potentially come down for DraftKings and that would alleviate so much of the burden and the marketing expenses that company has to put out quarter after quarter basis.
