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George Ronan
George Ronan
Articles (20) 

Billionaire Robert Sillerman's Plan for DraftDay Fantasy Sports

Here's why Sillerman's latest venture could be his next multithousand percentage points return candidate

May 02, 2016 | About:

An investor tasked with composing a list of the media industry’s most prolific identities would be hard pressed not to include Robert Sillerman.

Billionaire Robert "Bob" Sillerman is one of the most successful entrepreneurs and CEOs in the media, broadcasting and technology space, and his various ventures have generated high-level returns for both private and public investors for the past three decades. One of his latest ventures just announced a major development and, in doing so, has positioned itself to capture many multiples of its current revenues over the next few years. Here is what the development involves and how it affects the company in question – DraftDay Fantasy Sports Inc. (NASDAQ:DDAY).

First, however, for those not familiar with Sillerman, here is a quick look at his track record. His career started with the buying and selling of a host of radio stations during the 1970s and 1980s – a venture that concluded with the sale of radio assets to broadcasting giant Westinghouse for $727 million in 1989. After this sale, he built a 71-station radio company called Capstar Communications, which he sold, in 1998, for $2.1 billion. Out of a couple of remaining assets from the Capstar sale, Sillerman formed what was to become the biggest producer of live entertainment in the world – SFX Entertainment (SFXEQ). In 2000, he sold SFX to U.S. mass media company Clear Channel (now iHeartMedia Inc. [OTCMKTS:IHRT]) for $4.4 billion.

The transaction cemented his reputation in the live media and broadcasting space, but he was only just getting started. Subsequent to SFX, he formed and led CKX Inc., now known as CORE Media Group. The company acquired a host of high profile assets, including the Elvis Presley estate at Graceland, before he sold it to Apollo Management for $512 million in 2011. The latter now owns CORE as part of a 50:50 split with Twenty-First Century Fox Inc. (NASDAQ:FOX).

More recently, and getting to the focus of the announcement this piece intends to address, Sillerman formed Viggle, an application-based technology designed to incentivize the watching of television and movies with rewards.

Through Viggle, Sillerman is also known for owning and operating leading fantasy sports platform DraftDay Fantasy Sports, which the former acquired in September last year. In December, Viggle announced it would be rebranding as DraftDay and would change its ticker. This rebranding is now complete, and what used to be Viggle now trades on the NASDAQ as DraftDay Fantasy Sports.

This brings us to the latest update. On April 29, DraftDay announced it had entered into a binding term sheet that will see it acquire Rant, the company behind the global sports entertainment website rantsports.com. Through one of DraftDay’s existing assets, Wetpaint, which operates entertainment website wetpaint.com, the company will acquire Rant’s full network of sites, giving it access to one of the Internet’s leading networks of content publishers.

So DraftDay has picked up a network of entertainment sites – why is this a big deal? The answer lies in the disparity between DraftDay’s current market capitalization and the potential value of the network to advertisers.

With content sites such as those in question, the primary revenue driver is advertising. The sites sell display and native (media based) advertising space to companies looking to promote their goods and services, and users who come to the site to consume the content it creates are served the ads. In the display advertising space, it’s possible to track the efficacy of campaigns with a high level of accuracy. Companies such as Quantcast aggregate the swathes of data available on the efficacy of various campaigns and produce reports detailing the most effective websites through which to advertise.

In one such report, Quantcast recently listed rantsports.com as the No. 1 for target digital ad buying for the 2015 holiday season. The site also delivers up to 11 monthly visits per user – an industry metric that measures how many times a particular user returns to a site every 30 days. This puts it ahead of BuzzFeed and Vox in some months. For those not familiar with these latter two sites, it produces entertainment-related content similar to that of Rant and is the leader in the space. Last year, Vox raised $200 million in a capital raise that saw it valued at more than $1 billion. A similar raise saw BuzzFeed pick up $50 million in a deal that valued it at $850 million. These are sites that ranked below rantsports.com in the Quantcast report and that Rant’s network is outperforming across a number of key metrics – including the returning visitor metric already mentioned. All this, and the market only values DraftDay as a complete entity at a little over $10 million.

Therein lies the opportunity. It looks as though Sillerman has picked up on the chance to acquire a hugely underrated asset in Rant. His goal, the bringing of DraftDay’s (by way of Rant’s) market valuation more in line with that of its competitor peers. With an investment in DraftDay, therefore, it’s possible to gain exposure to this pending revaluation.

Of course, all this doesn’t even take into consideration the DraftDay platform, and its potential for growth going forward. The fantasy sports space in the U.S. generates up to $70 billion annually in the U.S. in tangible and intangible activity, with $15 billion total annual expenditures in playing capital, and is set to double in size across the coming decade. Its media properties aside, DraftDay is one of the fastest-growing platforms in the space and looks set to expand in line with the wider industry.

All said, the move to acquire Rant and its network is a game changer for DraftDay. As markets recognize the potential value of the Rant network, and its implications for DraftDay’s income-generating capabilities going forward, the latter’s market capitalization should shift to reflect this recognition. Whether Sillerman can turn DraftDay into his next billion-dollar project remains to be seen, but that he can turn it into something valued at more than $10 million looks as close to a certainty as we get in the markets.


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Comments

Russell Jones
Russell Jones - 11 months ago    Report SPAM

That's sounds like good news for me, the last 10 years I have been a big fans of Fantasy Sports .

MoneyWatcher
MoneyWatcher - 11 months ago    Report SPAM

I have been following Sillerman's investment in the media for some time and understand that his newest acquisitions also include a considerable stake in the women's news entertainment. Wetpaint, part of DraftDay, is the fastest growing vertical for millennial women's news entertainment, which makes the above article even more intriguing and relevant across society.

themindfulmaritimer
Themindfulmaritimer - 11 months ago    Report SPAM

I'm shocked that this is the first time I've heard about Sillerman and his investment backgroun. I'm excited to see what he has planned for DraftDay! Great article!

ToddPalmerIII
ToddPalmerIII - 11 months ago    Report SPAM

Intriguing! Some people just have a knack for making all the money when it comes to investments. When comparing my portfolio to the likes of Robert Sillerman I simply have to applaud excellency. Even most millionaire investors only make 1 or 2 good buy and sell choices in their lifetime. This gentleman has managed to do it multiple times with amazing success! I guess the old saying “Scared money don’t make money money” is absolutely true in this case. In order to build a portfolio of assets one must be willing to risk more if they want to gain more. I am genuinely happy for Mr. Sillermans success, and I can only hope to one day be able to make half as many great decisions with my own money.

faithiswings
Faithiswings - 11 months ago    Report SPAM

Interesting story. It was fascinating to read about Sillermans background, how his various investments led him to his current project with Draftday. I don't know much about fantasy sports so I really didn't realize how popular it was until reading this article. Sillerman seems to have plenty of success in his previous vendeavors so I'm sure his plan will do just fine.

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