The Covid-19 coronavirus pandemic has hit many industries hard, with sports and sports media near the top of the list.
Within even just that sector, however, are a few businesses that are even more vulnerable. DAZN certainly qualifies there; the fledgling streaming service built a brand (and a subscriber base) around expensive live sports rights, and without sports, there aren’t many reasons for subscribers to hang around. For a business model in large part reliant on the stability of monthly revenue, that’s dangerous, and DAZN has already taken steps like furloughing live event staff and planning to withhold rights payments to leagues that are shut down.
According to a Financial Times report today, DAZN’s leadership is exploring even more drastic options in an effort to stay afloat, up to and including being willing to put the whole business up for sale.
(DAZN owner Len) Blavatnik is exploring ways to inject new money into the lossmaking business, according to several people familiar with the talks, with the sale of an equity stake in the business the preferred option. However, an outright sale would also be considered, the people said.
The report goes on to note that DAZN has been looking for outside investment from places like Liberty Global as the pandemic shutdown has continued, though so far they’ve been unable to find a partner. It’s not hard to see why others aren’t exactly excited at pumping money into DAZN right now, either.
This thing was losing hundreds of millions before the pandemic in the hopes of building a subscriber base that would eventually be sticky enough to hang around longer term. Rights cycles make that very hard. And now who would want to take this bet on?
— tariq panja (@tariqpanja) May 23, 2020
I’m told their outlay is $1bn a year. Choices are: current owner shows appetite to continue pumping in more money, new investor provides new cash, or suddenly get millions of subscribers and turn a profit. None of those things happening right now.
— Murad Ahmed (@muradahmed) May 23, 2020
It’s not an enviable position to be in, and Blavatnik and the rest of DAZN’s leadership might have to make some very hard choices in the coming weeks. Not only is the timeline for the return of major sports murky, but in the event of a massive economic downturn, DAZN (and other services like it) might face heavy subscriber losses. On top of that, there’s a decent chance the virus makes a return at some point this fall or winter.
Given all of that, it’s not hard to see why everything is on the table.