DraftKings (NASDAQ:DKNG) and rival FanDuel are among the companies reportedly bidding for The Athletic after talks with other media outlets fell apart.
The Athletic is a subscription-based sports media entity backed by investors including Courtside Ventures, Founders Fund and Powerhouse Capital and is seeking a valuation of at least $750 million, according to The Information, which broke the news of the gaming companies joining the fray for the San Francisco-based company.
Launched in 2016 by Alex Mather and Adam Hansmann, The Athletic covers sports in 47 North American cities and the UK. A year ago, the company topped the one million subscribers and it’s been rumored to be a takeover target for much of this year.
In March, speculation surfaced that The Athletic was discussing a merger with Axios and that the result of that marriage would have been the combined entity going public via a transaction with a special purpose acquisition company (SPAC), but those talks fell apart. In June, it was revealed the sports media property was holding talks with the New York Times, but those negotiations were also scrapped.
DraftKings, FanDuel Are Sensible Suitors
DraftKings and FanDuel, a unit of UK-based Flutter Entertainment (OTC:PDYPY), both make for practical bidders for The Athletic because sportsbook operators are eagerly diving into media partnerships and deals as avenues for attracting and retaining clients.
In January, Macquarie Research forecast more than $30 billion worth of iGaming and sports wagering revenue by 2030, all attributable to operator relationships with media firms.
For its part, DraftKings is active in media deal-making. The Boston-based gaming company purchased Vegas Sports Information Network (VSiN) in March. A month later, it announced a $50 million investment in Meadowlark Media. Meadowlark Media is the owner of Dan Le Batard’s network of shows. The company was tied to speculation surrounding Score Media & Gaming, which was ultimately acquired by rival Penn National Gaming (NASDAQ:PENN).
Speaking of Penn, Barstool Sports founder David Portnoy said his company held talks with DraftKings prior to agreeing to a deal with the casino operator in January 2020. DraftKings also reportedly made a run at The Action Network, which was purchased by Danish betting analytics provider Better Collective for $240 million.
Big Valuation Increase, MGM Involvement
The Athletic seeking a valuation of $750 million implies the company is worth 50 percent more today than it was in 2020. Commanding that price tag is a different matter because it’s believed the media company isn’t turning a profitable and is burning cash.
Last year, the media firm raised $50 million in venture funding, valuing it at $500 million. Bedrock Capital, Founders Fund, and actor Matthew McConaughey participated in that funding round.
Another point of interest is that the sports media property has a partnership with BetMGM though it’s not clear if MGM Resorts (NYSE:MGM) and Entain — BetMGM’s operators — are mulling a run at The Athletic. BetMGM also has a media deal with Yahoo! Sports. To date, the gaming company hasn’t pursued direct media acquisitions as have some of its rivals.
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