How Fox Offers Unique Exposure To US Sports Betting

Fox Corp FOX FOXA shares traded higher by 0.6% on Thursday after the company landed a Wall Street upgrade.

The Analyst: Rosenblatt Securities analyst Mark Zgutowicz upgraded Fox from Neutral to Buy and raised his price target from $39 to $48.

The Thesis: In the upgrade note, Zgutowicz said Fox is unique among its big media peers in its exposure to the fast-growing and potentially massive U.S. sports betting market. The sports betting and media industries have been experiencing a consolidation wave in recent months, and Zgutowicz said Fox is positioned to be a potential long-term winner.

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In October 2019, Fox received a 2.6% equity stake in FanDuel as part of the buyout of The Stars Group by Flutter Entmt ADR PDYPY. That deal also gave Fox the right to increase its FanDuel ownership stake to 18.6% in 2021.

Earlier this year, media reports suggested Flutter was considering spinning off FanDuel to list on a U.S. exchange. Fox is currently in arbitration to determine the appropriate price for its 18.6% equity option stake in FanDuel, a process that Zgutowicz said will likely play out in Fox’s favor.

“This outcome would be a win/win, securing FanDuel's still top share status with perhaps the best long-term media content/audience scale in Fox Sports and Fox properties broadly,” Zgutowicz said.

He said Fox could be well-positioned to leverage its large news and sports audiences and expand its advertising inventory into targeted content, such as sports betting, family, food and reality.

Benzinga’s Take: The U.S. online sports betting and iGaming market is booming, and FanDuel is one of the heavy hitters up to this point. In the first half of 2021, FanDuel captured 26% aggregate market share of the U.S. online sports betting and iGaming market, more than any other company.

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