Deutsche says Penn, ESPN pact positive for Caesars, DraftKings

Deutsche Bank analyst Carlo Santarelli views Penn Entertainment’s (PENN) strategic alliance with Disney’s (DIS) ESPN as a net positive for Penn, saying it was clear the Barstool brand didn’t have the customer acquisition network it advertised and the company now has a new potential growth while essentially eliminating the risks associated with Barstool. The firm also sees the news as positive for Caesars (CZR) and DraftKings (DKNG), as it “relinquishes both from their committed spend with ESPN over the coming years.” While it hasn’t necessarily been widely publicized, Caesars’ and DraftKings’ respective ESPN partnerships were “absolute anchors,” with the customer acquisition spend, through the ESPN channel, likely the most expensive channel on a per customer acquired basis, Deutsche contends. The firm thinks the breakup is likely immaterial to both companies’ net revenue, and tangibly favorable for adjusted EBITDA.