Disney (DIS) – ESPN Bet & Blackwells – January 20, 2024
I’ve been searching for performance data on ESPN Bet, and I finally found some this week. JMP Securities published download data from the NFL’s Wildcard Week. ESPN Bet claimed 14% of the download market share from that week. This compares to mid-to-high single digit volume growth that Penn enjoyed when ESPN Bet was still called Barstool Sportsbook. Quite the bump, which just shows you the power of ESPN’s brand. Barstool is certainly no slouch in the world of sports media brands. It has a large cult following; it just cannot match the clout that ESPN brings.
During that week, ESPN Bet enjoyed 147% Y/Y download growth compared to 11% Y/Y for DraftKings (the clear share leader today). For the NFL season as a whole, ESPN Bet enjoyed 417% Y/Y download growth (vs. when it was called Barstool Sportsbook) with DraftKings at 5% Y/Y growth. While ESPN Bet is taking share DraftKings will likely remain the long-term share leader. Its user-base has proven remarkably sticky, despite virtually no switching costs. Still, I also think ESPN Bet will be part of the betting powerhouses with DraftKings and Fanduel. The rumored NFL partnership would make me even more confident in that happening. There’s a lot to like about that for Disney, as it’s paid for its brand and owns $500 million in Penn warrants. These warrants should become more valuable as Penn’s online sports gambling morphs from an underdog to a centerpiece. In other Disney news, it rejected activist investor Blackwells Capital’s 3 board member nominations for “lacking needed experience.” It also unsurprisingly rejected Trian’s nominations (another activist), but the Blackwells news is a bit more surprising considering this was supposed to be a “friendly” activist. This is actually good news for shareholders. It diminishes support for Disney’s current turnaround path and adds significantly more pressure on the current executive team to deliver on promises in a timely manner. Perhaps if they don’t, Blackwells and Trian will team up to force some more drastic shareholder value actions. I’m speculating, but you get my point.
Source: YCharts
