Fox Corporation CEO Lachlan Murdoch has announced the media company is proceeding with its plans to take an 18.6% interest in FanDuel – and could do so at a significant discount to the US leader’s market value.
Speaking at the Goldman Sachs Communacopia and Technology Conference, Murdoch insisted Fox remains a “tremendous believer” in sports betting and that the business plans to push ahead with taking the position in FanDuel.
He said: “We think it’s growing into a great business. It also drives engagement with sports, whether it’s football or baseball or any of the sports that we proudly broadcast.
“We like it both from a television point of view and also, obviously, as an opportunity to further engage our viewers.”
According to Murdoch, Goldman Sachs has valued FanDuel as a stand-alone business at $35bn (GBP), meaning an 18.6% share of the company would be worth $6.5bn.
However, a 2022 ruling by New York’s Judicial and Arbitration and Mediation Services (JAMS) granted Fox the right to purchase its previously agreed interest in the Flutter-owned operator at $3.7bn, with a 5% annual escalator.
This means that the current price to activate the 18.6% share option would be around $4.3bn, creating a $2.2bn discrepancy in value, although Murdoch said his company has no intention of missing out on this opportunity.
As per Fox’s 2024 annual report, published in August, the company held around 4.3 million ordinary shares in Flutter, equating to an approximately 2.4% shareholding, as of 30 June.
The report also noted Fox’s “option exercise price” to take a 18.6% stake is approximately $4.3bn, as of 30 June, with the media heavyweight holding a 10-year call option that expires in December 2030.
“We’re not going to leave $2bn the table,” Murdoch explained at the conference. “But this is an option that expires in 2030. So, we have six years to exercise that option, and we will exercise it.”
However, to build that position in the Flutter-owned company, Fox must be a licensed sportsbook operator in the states in which FanDuel does business.
Murdoch revealed the group has already initiated the process of acquiring state gaming permits.
Murdoch said: “We’ve begun the process with state regulators around licensing. To fully monetise the option, we need to be licensed as a gaming operator, even with only 18.6%.
“And so, we’ve started that process with state regulators to begin the gaming licence approvals.”
As part of Flutter’s combination with The Stars Group in 2020, Fox received the right to acquire the 18.6% equity interest in FanDuel.
The Stars Group and Fox launched Fox Bet in 2019 on a joint venture basis, with the brand absorbed when Flutter and TSG came together.
Fox Bet was shuttered last summer, with Fox retaining the rights to the future use of the Fox and Fox Bet brands, including the Fox Bet Super 6 game.
According to Flutter’s latest earnings, published 13 August, FanDuel held a 47% share of the US sports betting market based on gross gambling revenue (GGR) in Q2 and was the country’s number one igaming operator with a 25% slice of the vertical’s industrywide GGR.
EGR has contacted Flutter for comment.
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