Fox Corp. disclosed in September it is planning to execute an option to buy 18.6 percent more of FanDuel, which is owned by gambling leader Flutter Entertainment. The cost thus far is $4.3 billion, but annual escalators would drive that figure up.
But here’s the rub: UK-based Flutter does not seem too keen on the move. In fact, it appears downright hostile.
Company CEO Peter Jackson (not the filmmaker!) responded to questions about Fox on an earnings call Tuesday, emphasizing the high hurdles, saying that Fox needs to secure gambling licenses, the stake is illiquid, and that there is a steep cost involved. Nowhere were kind words for a major prospective new partner.
“You have to ask Fox whether they intend to put their shareholder capital into that or not,” Jackson said.
An industry source put it more bluntly, saying “It’s probably a question for them as to where they are with their licensing arrangements and plans to exercise the option. As we currently see it, they’ve a lot of work and scrutiny to get through on the former point, which is needed to even consider the latter. You could also ask why they’d wish to spend their shareholder’s capital buying an illiquid stake in one of our subsidiaries. The reason Peter listed these factors on the call is because we don’t see the recent comments as genuine.”
Flutter inherited the Fox option with its 2020 purchase of The Stars Group, which gave Fox an option to buy part of the Canadian firm’s US operations. The Star Group had a bookmaker with Fox called Fox Bet, which Flutter closed last year.
Fox and Flutter also bickered over the option price, a dispute settled with a 2022 arbitration decision. But the comments from the Flutter side indicate no matter the price, the global gambling giant doesn’t want Fox as a partner.
Fox already owns 2.5 percent of Flutter.
The development comes as FanDuel, the number one sports gambling platform in the U.S., ramps up its marketing, underscored by the recent naming rights agreement for Diamond Sports regional sports channels. Jackson’s response to a question about the deal was a head-scratcher. What is now FanDuel Sports Network (previously Bally Sports Regional Networks) has 16 RSNs televising 13 NBA and eight NHL teams, and at least three MLB squads.
When asked about the deal and how the company planned to activate around it, Jackson didn’t give specifics and then cited a sport FanDuel Sports Networks is not known for.
“We’ve been looking at this RSN deal for a while,” he said. “We thought it’s an interesting opportunity to get involved in college sports, very important. It gives us, you know, access to some assets that we would not previously been able to look at and say, you know, we thought it was worth looking at it, being around the hoop, and seeing what we could do with this.”
College sports? Diamond’s regional sports channels may have a smattering of collegiate sports, but that is not what pays the bulk of the bills: Hockey, basketball, and baseball do.
In fact, Diamond last year in its ongoing Chapter 11 walked away from its deal with Raycom Sports, its biggest college sports contract. That deal produced Atlantic Coast Conference basketball and football games for Bally Sports RSNs in the region.
Representatives for FanDuel conceded Jackson had misspoke.
“I’m pretty sure Peter just misspoke when he mentioned college sports,” a FanDuel spokesman wrote in an email. “We obviously got into our partnership with Diamond primarily for their live rights packages with MLB, NBA, and NHL. They have far fewer college sports programming.”
Jackson did say that “early indications are very positive” regarding their RSN investment. “I think the team has done a brilliant job, from a standing start, to deliver such good and strong integrations. And we’ll see how much it helps, benefit the business.”
The previous naming rights partner for the Diamond RSNs was Bally Sports, a gambling company that didn’t see a great return on investment. FanDuel has a far wider reach and can likely promote itself during telecasts more efficiently and effectively.
Thursday, Diamond is scheduled to argue for its Chapter 11 plan at the bankruptcy confirmation hearing, a critical step to emerging as a new company. Failure would doom Diamond and with it FanDuel’s naming rights. However, the bankruptcy judge seems predisposed to approve the plan.
