DraftKings-FanDuel Merger Not Likely To Signal Return To Aggressive Marketing Push
DraftKings and FanDuel are on the verge of merging into a combined firm, but however things "shake out, TV ad sales executives aren't holding out hope for a return to the DFS gold rush of last fall," according to Anthony Crupi of AD AGE. It is "not entirely clear how the emergence of a mega-DFS company would impact the advertising market." On the one hand, with the "arms race settled, the impetus that propelled a good deal of DraftKings' and FanDuel's year-ago TV spend effectively vanishes." On the other hand, the "melded entity is likely to turn to big-reach televised sports in order to get out the word on its new brand and/or a concomitant upgrade in the end-user experience, more generous payouts, etc." According to data from iSpot.tv, DraftKings has spent $14.2M on national TV inventory, down 91% compared with the $149.6M it "shelled out during the first 10 months" of '15. FanDuel's TV spend has dropped 92% to $9.85M, "compared with its year-ago splurge" of $123.4M. If the "drastic reductions in ad spend reflect a major shift in their respective customer-acquisition strategies, there also can be little doubt that the costs associated with waging a legal battle with the likes of New York State have contributed to DraftKings' and FanDuel's less-frenzied approach to marketing" (ADAGE.com, 10/31).
WHO'S IN CHARGE? BLOOMBERG NEWS' Novy-Williams, Sherman & Soshnick cited sources saying that the companies are "close to joining forces under the leadership" of DraftKings co-Founder & CEO Jason Robins. Robins is "expected to serve" as CEO of the combined firm. FanDuel CEO Nigel Eccles will be "chairman of the board, which will draw members evenly from both companies." The sources "didn’t say why Robins is expected to lead instead of Eccles," and they added that the merger plan also "leaves open the possibility of hiring an outside executive to lead the new venture." The new company will "seek to raise money shortly after the merger" (BLOOMBERG NEWS, 10/31). The WALL STREET JOURNAL's Berzon & O'Brien note the companies have been "discussing a merger for months as their legal and regulatory problems have stacked up." Sources said that the deal "seems to be moving quickly but could still fall through." A potential merger comes as football season, "key to the daily fantasy sports industry, has so far been disappointing, compounding an already bleak financial picture" (WALL STREET JOURNAL, 11/1).
MONOPOLY MONEY? In Boston, Curt Woodward cites legal experts as saying that if DraftKings and FanDuel merge, it would "create a daily-fantasy-sports powerhouse -- possibly raising antitrust concerns among federal regulators." Those questions could "complicate a deal that appears increasingly likely." However, industry and legal experts "believe regulators might be skeptical of a merger because DraftKings and FanDuel control about 90 percent of the market, allowing it to raise prices without much fear of competition" (BOSTON GLOBE, 11/1).
