Investing.com - Fox surged Thursday after it invested hundreds of millions of dollars on a sports-betting platform that it hopes will diversify its revenue streams and expand the reach of the Fox Sports brand.
Fox (NASDAQ:FOXA) paid $236 million for a 4.99% stake in Toronto-based Stars Group as part of a 25-year agreement in which the U.S. broadcaster plans to launch two apps: a free-to-play version with cash prizes for predicting outcomes of sporting events and a real-money wagering app called Fox Bet for states where it is legal. Both apps are expected to launch this autumn.
Following the announcement, shares of Fox (NASDAQ:FOXA) rallied more than 3%, and Stars Group (NASDAQ:TSG) rose more than 15%.
“Digital sports wagering represents a growing market opportunity that allows us to diversify our revenue streams, connect directly with consumers and expand the reach of the Fox Sports brand," said Eric Shanks, Fox Sports chief executive and executive producer.
Under the terms of the deal, Fox also has rights to purchase up to 50% of Stars over the next 10 years.
The deal comes a day after Fox delivered its first quarterly results as a standalone company after selling its film and TV studios to Disney, beating Investing.com’s consensus estimates on the top and bottom lines.