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Disney’s Multi-Billion Dollar Poison Pill
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A long read to be sure.
But if this is right, that Bob Iger is tying Disney to gambling to sour Saudi Arabia on acquiring a controlling stake in Disney, it explains a lot.
No doubt, a lot of investors are concerned about the aggressive marketing of sportsbooks. It will become a talking point once the euphoria of all those revenues starts to balance against the cumulative effects of the inevitable rise in gambling addicts.
But that might take a long time (relatively).
Disney seems to be hedging that bet with what’s clearly a license deal that keeps Disney itself out of the operations. But for all the consumers out there, ESPN Bet is ESPN and ESPN is Disney. For all intents and purposes, it sure looks like Disney is in the gambling business.
PENN’s sportsbook, now ESPN Bet, is less than 2% of the sports betting market. Iger couldn’t have chosen a better “straw man” for his “poison pill”.
Luckily, if it wants to, Disney can cut ESPN loose, including the deal with PENN.
But I think Saudi Arabia is not a typical investor. It has less wiggle room in terms of supporting a business that’s effectively a mortal sin for Muslims. The association of Disney with gambling may just be enough for the Saudi government to turn away.
Does this explain the increased chatter on who is financially supporting the multiple bids now being made for Paramount?
Is this really a conscious strategy by Bob Iger?
interesting. It would be relatively easy for the Saudis to dispose of ESPN Bet if they wanted to take a run at Disney, though Sportsbet.io has become a sponsor of Newcastle United under Saudi ownership, so they seem more flexible than one might think.
Thank you Gavin. I think the two are quite distinct. The licensing deal allows PENN to fully co-opt the ESPN brand as a sportsbook. This is not Barstool sponsoring content on ESPN, it’s ESPN becoming a betting shop. Punters will identify ESPN Bet as ESPN, not PENN Entertainment.
But you are right, ESPN can be carved out of Disney by selling it on. That has been in the cards for a while. But in this year’s earnings call, we heard Disney say ESPN is now a core silo within its group accounts. That makes it seem more integrated than it once was.
The question really is, is Disney now in the sports betting business?
This is corporate strategy played at the highest level.
Sportsbooks and other forms of Gambling are still very much seen as being the home of Gangsters and Maffia. Online betting has helped to change this image somewhat, but still there are so many legal restrictions that we are not talking throughly main stream. That Disney is willing to emerge itself in this market does nor seem obvious at all. Them setting up defences against an unwanted takeover makes sense.