Despite the fact that Disney owns broadcast rights to many live sporting events and holds millions of shares of DraftKings, don’t expect DraftKings streaming to include Disney offerings any time soon. The facts point toward that not being the case.
The connection between Disney and DraftKings could be short-lived. Additionally, even if it doesn’t turn out that way, other factors make Disney using DraftKings as a distribution channel for its content improbable.
Why is DraftKings streaming Disney content possible at all?
When talking about Disney content, Disney’s animated adventures and TV sitcoms aren’t the content being discussed. None of the Marvel or Stars Wars content is in this discussion either.
Disney owns ABC and ESPN, among other content mills. Through those channels, it holds rights to broadcast games with several sport entertainment ventures like MLB and the NBA.
Disney already has distribution avenues for that content like Hulu and ESPN+, in addition to myriad cable and satellite television service providers. In theory, it could add DraftKings to that list.
When Disney acquired 21st Century Fox, it also got the ownership stake that Fox had in DraftKings. When DraftKings went public, that turned into over 18.2 million shares of the new company.
Despite the volume of shares, Disney has no control over DraftKings. That means if DraftKings and Disney had a mutual interest in adding the DraftKings app to the distribution network, the two parties would still have to work out that deal.
Owning the shares in DraftKings would make it a natural fit for Disney in that case, however. Regardless, it’s unlikely to happen. It doesn’t fit Disney’s modus operandi.
Why Disney and DraftKings probably will not hook up this way
DraftKings has streamed live events in its app in the past. It may do so more in the future, but acting as a third-party distribution channel for Disney may not be the best approach.
Disney might charge more than the primary rights holders themselves. That’s because Disney’s subsidiaries bear the cost of creating the content and are in the business of doing so for profit instead of just giving that content away.
Additionally, partnering with DraftKings in such a way might look bad for Disney. That goes beyond running contrary to the family-friendly marketing that Disney runs.
Disney’s public stance has been consistently anti-gambling. For example, Disney lobbied the Florida Legislature last year in opposition to the legalization of sports betting in that state. DraftKings had lobbyists in the same body on the other side of that debate.
It would look hypocritical to lobby against the expansion of legal gambling while simultaneously streaming its content on the app of a legal gambling company. That also applies to airing commercials for DraftKings during Disney content.
For that same reason, it’s very possible that Disney will dump the DraftKings stock. As Disney didn’t actually go out and buy the shares anyway, it’s more probable than not it will divest itself.
For all these reasons, don’t expect to see ESPN content on DraftKings any time soon. The more likely result of this situation is that Disney will soon sell all of its shares.
