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DraftKings Gains on ESPN Partnership Report, Analyst Says Announcement May Come Soon

Stock Markets Oct 07, 2022 08:22AM ET
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© Reuters. DraftKings (DKNG) Gains on ESPN Partnership Report, Analyst Says Announcement May Come Soon
 
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By Senad Karaahmetovic 

Shares of DraftKings (NASDAQ:DKNG) are up about 5.5% in pre-open Friday after Bloomberg and the Action Network reported the company is close to agreeing to a new, large partnership with Walt Disney's (NYSE:DIS) ESPN.

In a recent interview with the media, ESPN Chairman Jimmy Pitaro confirmed that the company is looking for a major sports betting partner.

"We know that sports fans are craving not just more sports betting content, but they’re craving the ability to actually place bets in a seamless fashion from their online digital sports experiences," Pitaro said.

Oppenheimer analysts reflected positively on media reports of ESPN and DraftKings having advanced talks over a long–term deal.

"We see any agreement providing more odds' integrations to better direct consumers to wagering opportunities that accelerate same-Game Parlay (SGP) and live betting adoption. We believe DKNG is in a favorable negotiating position as the only operator with the budget scale to meet DIS partnership standards, following FanDuel's investments in its own OTT channel, and operators scaling back advertising (Caesars/BetMGM)," the analysts said in a client note.

While the Bloomberg report noted Disney was looking for $3 billion for an extended deal, the analysts believe any agreement is likely to be "well under the $3 billion."

"We see a closer operating partnership, combined with DIS 4% DKNG ownership, providing a solid floor (potential acquirer) for the stock. We believe an announcement could be made before or around the start of the NBA season (Oct. 18th)," the analysts concluded.

DraftKings Gains on ESPN Partnership Report, Analyst Says Announcement May Come Soon
 

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