ESPN is finally entering the legal sports betting space.

The Disney-owned sports media giant — which for years actively resisted any connection with gambling — has completed an agreement with Penn Entertainment to create ESPN Bet. 

The sportsbook, set to launch this fall in 16 states, will be a rebranding from Barstool Sportsbook, a key outlet of the sports media brand Penn purchased in two stages.

ESPN is making the move amid an ongoing and massive reorganization, including large-scale layoffs and a potential partial equity sale. But network leaders still believe the time is right, as legal sports betting further establishes itself more than five years after the landmark U.S. Supreme Court decision allowing states to set their own laws in the space.

“Our primary focus is always to serve sports fans, and we know they want both betting content and the ability to place bets with less friction from within our products,” said Jimmy Pitaro, ESPN chairman. “The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN.”

Penn Entertainment is making $1.5 billion in cash payments to ESPN over an initial 10-year term and granting about $500 million in stock warrants to purchase Penn Entertainment shares, vesting over the next decade. In return, it will access the ESPN brand and its marketing support, gaining access to the largest entity in U.S. sports digital media.

As part of the deal, Barstool Sports founder Dave Portnoy is also buying 100% of that outlet back from Penn Entertainment, ending a three-plus-year relationship that never saw the Barstool Sportsbook mount a significant challenge to industry leaders FanDuel and DraftKings. Penn Entertainment also will reap 50% of the gross proceeds of any subsequent sale or monetization of Barstool.

ESPN is making the move just days after Fox Corp. and Flutter Entertainment shuttered Fox Bet amid an ongoing consolidation in sports betting. Penn National shares shot up by more than 20% in after-hours trading amid the news that it’s dumping Barstool Sports in favor of ESPN.

The Athletic is making increased strides toward profitability — but continues to create organizational turmoil for its parent company, The New York Times.

The Times said Tuesday that The Athletic’s adjusted operating losses during the second quarter shrank to $7.8 million from $12.6 million year-over-year, and from a loss of $11.3 million in 2023’s first quarter.

The improved financial performance was due in part to a 55.3% rise in revenue to $30.4 million, as the Times achieved additional traction among consumers with its bundle subscription offer combining the newspaper and The Athletic. More than 3.6 million subscribers can access The Athletic either through the bundle or a standalone subscription, up from 3.3 million in the first quarter and 1.7 million a year ago.

“Our second-quarter results confirm our view that our essential subscription strategy is working as designed, with momentum in several key areas,” said NYT Co. president and CEO Meredith Kopit Levien.

The $11.3 million first-quarter loss for The Athletic is a recast figure from a previously reported $7.8 million loss, as the Times updated its methodology for allocating bundle revenue and expenses. The Athletic has yet to turn a profit.

Staff Unrest

The Times’ recent decision to shutter its sports desk and handle coverage with non-union staffers from The Athletic — now the subject of a formal labor grievance — has led to further disruption.

A recent meeting between Times staffers and newspaper chairman and publisher AG Sulzberger reportedly ended with the executive turning a “deaf ear” to their complaints.

“[Sulzberger] murdered the sports desk,” a staffer said, according to the New York Post.

The ongoing dispute wasn’t referenced in either the Times’ earnings report or its call with analysts.

Even as the media landscape fractures and streaming captures increasing attention, Fox still believes traditional linear television is a critical tool to monetize its sports assets.

In a quarterly earnings call with analysts Tuesday, Fox CEO Lachlan Murdoch doubled down on the existing cable and satellite TV infrastructure.

“We think that the pay-TV ecosystem continues to be of tremendous value for our businesses and really drives the value of Fox Sports and that content, and will for a long time to come,” Murdoch said. “We don’t envision a moment when you leave pay TV and quickly transition to a direct-to-consumer universe. We think you will enter a phase where both are important.”

Murdoch’s comments aren’t surprising, given that sports television audiences are still typically much larger than their streaming counterparts. In May, he blasted the shift of the NFL’s Thursday Night Football to Amazon as a “disaster” following a 42% viewership drop.

Fox also posted flat quarterly revenue of $3.03 billion and a 7% boost in full-year revenue of $14.91 billion, figures boosted in part by TV ad revenue from Super Bowl LVII and the Women’s World Cup.

But sentiment still runs directly against a business in accelerating decline, as cord-cutting has slashed the number of traditional TV households from 102.1 million in 2014 to 63.2 million in 2023, fueling Disney CEO Bob Iger’s belief that linear TV “may not be core” to his company.

Realignment Boost

Murdoch also said the forthcoming entry of Oregon and Washington to the Big Ten will enhance Fox’s new media rights deal with the conference.

“We think these additions will only strengthen our football franchise across Fox Sports, but particularly our partnership in the Big Ten Network. So we think it’s very positive for us across the board,” he said.