The Action Network has a new owner. The network, which focuses on sports betting tracking and information, was launched by The Chernin Group in October 2017, with ESPN’s Chad Millman coming on ahead of that launch as head of media. It started as a combination of three existing companies Chernin had previously bought (Sports Insights, FantasyLabs and SportsAction), but quickly expanded and made some notable hires, including Matt Moore from CBS and Darren Rovell from ESPN. Now, they’ve been acquired for $240 million by the Denmark-based Better Collective, which already owns plenty of European properties and U.S. properties RotoGrinders and VegasInsider. Here’s more on that from Benjamin Mullen of The Wall Street Journal:
A wave of deal making is afoot in the sports-betting world, as participants ranging from analytics firms to casinos look to cash in on the growing sector.
In the latest move, Denmark-based Better Collective, which offers tools and media content to help subscribers place more-informed bets, said Monday it agreed to purchase rival Action Network Inc. for $240 million.
…There was a competitive auction for Action Network, reflecting the high level of interest in media properties focused on sports betting, according to a person familiar with the matter. DraftKings, FanDuel Inc. and private-equity firms were all suitors for Action Network, which tapped investment bank Moelis & Co. to run a sales process, the person said.
An interesting note in Mullen’s article is that Action Network has raised around $20 million to date and brought in around $15 million in revenue (mostly through subscriptions and affiliate revenue) in 2020, but wasn’t profitable that year. Granted, 2020 was a challenging year for many sports media outlets from pandemic-related effects, but the note on the network not hitting profitability yet is significant; that’s further evidence that this is a move (especially at this price) about perceived long-term potential for Action Network rather than where it is right now. And, as Mullen notes, plenty of betting companies are looking to get scale and added U.S. recognition on the content side right now as more and more states further legalize sports betting. Here’s part of the Better Collective release on this move, which emphasizes how this will boost their U.S. presence:
Sports betting media group, Better Collective, today announces that it has signed an agreement to acquire 100% of the shares in Action Network, Inc. (“Action”) for 240 mUSD (198 mEUR) on a cash and debt free basis. Founded in 2017 and launched in 2018, Action is uniquely positioned in the US market as the premium sports content and product destination for US sports bettors. A trusted source for sports fans, Action’s media platforms provide an enhanced experience for its users through original sports news content, premium insights, deep menus of odds and proprietary betting tools and data. Action’s diverse revenue model includes a rapidly-growing affiliate marketing business focused on customer acquisition for betting operators in the US as well as subscription products, anchored by Action Pro, Action Labs and Fantasy Labs.
Action continues to benefit from the expanding legal sports betting market in the US. In 2021, Action is expected to achieve revenues approaching 40 mUSD, an increase of over 100% year-on-year, while also generating positive operational earnings in 2021. As more states legalize online sports betting, the potential to further deepen and expand Action’s commercial partnerships with large US-based sportsbooks such as BetMGM, DraftKings, FanDuel and PointsBet is significant. Action is headquartered in New York, and has approximately 100 employees.
Those commercial partnerships are worth some further discussion, as that’s where a lot of this Action Network affiliate revenue is coming from. The company makes a good chunk of its money by signing deals to refer its readers and listeners to different sportsbooks. It’s somewhat similar to those books’ advertising deals with various teams and leagues, but an online content company can offer a further affiliate deal, one that makes it so the book is just a click away from the articles. And, as Action’s Patrick Keane told Mullen, that (combined with other revenue streams like subscriptions and consumer goods) been quite helpful for them during the recent downturns in conventional digital advertising:
In an interview, Action Network Chief Executive Patrick Keane said digital-media companies have been challenged over the past decade largely because of pressures on their advertising businesses. But the rise of sports betting has provided opportunities for companies with multiple revenue streams, including subscriptions, affiliate fees, advertising and consumer goods, he said.
“I’ve been in the advertising business for two decades, and there’s a reason why I’m not in it anymore,” said Mr. Keane, who oversaw ad-sales businesses at Google and CBS.
Action Network certainly has some U.S. name recognition and some established presence, and those seem to be key things Better Collective is targeting here. It also seems like there might be some opportunities to integrate Action Network’s offerings with the sites Bettor Collective already operates.
And if more states keep expanding legal sports betting, and if the market keeps growing the way many expect, and if Action Network is able to capitalize on that, this could work out for everyone. But this is a significant price tag, and it’s notable that the perceived value of online media outlets often changes very quickly (see Verizon selling Yahoo and AOL to Apollo Global this week for around half of what they initially paid for those two properties). We’ll see where Action Network’s value goes from here.