The decision from Perform Group to split its consumer-facing DAZN streaming business from its largely betting-related content and data supply business could signal the latter unit is up for sale, according to industry sources.
Perform announced the split last week, saying it was forming “two distinct brands” out of its existing lines of business.
The business-to-consumer business, now called DAZN Group, will be led by original Perform founder Simon Denyer and will comprise the on-demand sports streaming business as well as consumer-facing websites Goal.com, SportingNews and Spox.com. These sites will now be more clearly focused on driving traffic to and acquiring subscribers for DAZN.
The remaining business-to-business activity, including sports betting data provider RunningBall and the Watch&Bet streaming arm, will continue under the moniker Perform Content with Ross MacEacharn continuing as chief executive of that business.
Brands will report to the same master
The group said the two brands will be run by separate governance structures but will report to one central board headed by long-term Perform chairman John Skipper.
The entire group is owned by Len Blavatnik’s Access Industries, which also owns Warner Music.
DAZN has to date been launched in Germany, Austria and Switzerland. as well as Japan and Canada. It offers unlimited access to sports coverage for a small monthly fee similar to Netflix and Spotify.
A hint at the main driver for the split came from the public comments of Denyer, who suggested DAZN had displayed “exceptional growth and execution” and that he wished to “focus our efforts around our primary growth engine.”
According to accounts for the year to December 2017 registered with Companies House in the UK, DAZN saw revenues hit £90.8m ($119.4m) while website media revenues fell 7 percent to £58.9m. However, costs associated with DAZN also soared to £114.7m helping to push up operating losses for the group as a whole to £214m from £50.8m.
What elements make up Perform Content?
The content business, which also includes the Opta sports statistics operation, saw revenues climb 41 percent to £278m ($366m) for the past 12 months.
“It’s an interesting move and very typical,” said Simon French, analyst with Bixteth Partners in the UK. “They have these two parts of the pie and when they were integrated, they were coming out as less than the sum of the parts.”
One industry source added it was “clear that (DAZN) is the major strategic focus now.”
“I would say it’s more likely about growth than value, although the two are linked of course,” the source added. “Clearly, they are seeing this as the growth opportunity.”
Said French: “On DAZN, what’s not to like. It’s a direct-to-consumer, cord-cutting sports-led media play that sounds exciting. Without saying the m-word, it appeals to that elusive, high-disposable income audience. It will generate a lot of interest on the public markets.”
How does this affect Perform Content and DAZN?
What this means for the Perform Content business is less clear, however, with the source suggesting that “one possibility” would be that the unit was now effectively up for sale.
There would certainly likely be a lot of interest in Perform Content given recent corporate activity in the sports data supply sector.
Both Sportradar and Genius Sports were the subject of private equity investment in the summer.
In early July, Sportradar saw the Canada Pension Plan Investment Board (CPPIB) and Silicon Valley-based growth equity firm TCV buy stakes in the business which valued the firm at €2.1bn ($2.5bn). Meanwhile, Genius Sports was bought by specialist buyout firm Apax Partners for an undisclosed sum later that month.
Another industry source confirmed the possibility of a sale of Perform Content. “I wouldn’t be surprised if they sell Perform,” they said. “All the money is in the DAZN side of the (business).”
However, whether any of Perform’s rivals would get involved in any deal is more uncertain. Depending on the identity of the buyer, competition concerns would likely be raised in multiple jurisdictions.
French suggested there would be competition concerns if the likes of Sportradar bid for the business. “But the likeliest buyer would be private equity,” he added. “They could back the current management team and plump it up for a float, maybe in the US, in a few years once sports betting has bedded down.”
A fight for rights?
Speaking at the Betting on Sports conference in London last week, Nathan Rothschild, co-founder and partner at the sports data supply business iSport Genius (which recently signed a deal with DraftKings for the supply of a consumer-facing sports data platform), said he could see the appeal of the split.
“There is so much interest in sports data right now, on both sides whether it is B2B or B2C,” he said. “The opening in the US will only fuel both, though right now it is in the supply of data products to US sportsbooks where we see the most interest.”
One big question if Perform Content were to be sold relates to the data and AV rights the combined company has amassed. One way of looking at DAZN is that it is a product of the cast-offs rights from Watch&Bet, consisting of rights to non-domestic leagues and other international rights for the like of the Women’s Tennis Association, NFL and Federation of International Basketball (FIBA).
The company said in its statement that DAZN would “remain the main rights holding company” for the entire group.