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Volume 25 No. 48
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Fox Marks Down $160M Investment In DraftKings By About 60%

The $160M investment Fox Sports made last summer in DraftKings for an estimated 11% equity stake has declined in value by about 60% to $65M. A quarterly filing by 21st Century Fox to the SEC did not detail the reasoning behind Fox’ sharp markdown in valuation for DraftKings, but said that based on data from "a recent financing transaction, [Fox] determined that a portion of its investment in DraftKings was impaired and recorded a loss of approximately $95 million…for the three and six months ended Dec. 31, 2015." Fox officials did not comment further. The disclosure follows several months of challenging news for the daily fantasy operator in which it has faced widespread legal and legislative challenges, slowing user growth and departures from key payment processors. Fox Sports last July led a $300M round of venture financing in DraftKings, valuing the company well north of $1B, with an attached commitment of $250M in media buys by DraftKings on Fox properties by the end of '17. Two unconfirmed reports from last fall suggested a further funding round for DraftKings of an additional $200M with a company valuation of more than $2B. DraftKings has not confirmed the existence of any new funding since the Fox-led round last July. The new valuation of Fox' investment came on the same day DraftKings and ESPN ended their exclusive advertising agreement (Eric Fisher, Staff Writer).

VALUE CUT: In Boston, Curt Woodward reports other DraftKings investors "have not disclosed how much they think the company is worth." Current investors include the Kraft Group, Boston-based Wellington Management, MLB, NHL and the owners of the Knicks, NHL Rangers, Dodgers and Cowboys. Woodward notes there is "some leeway for investors when valuing privately held companies." But mutual funds "owned by John Hancock Financial and Hartford Financial Services Group Inc. have cut the value of their stakes in DraftKings" by about 15%, from $7.67 per share to about $6.52 per share (BOSTON GLOBE, 2/10).