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In 2019, Walt Disney Co. Chief Executive Bob Iger said he did not see his company getting directly involved in the fast-growing online sports betting business, despite clear opportunities for its sports media behemoth ESPN.

But cord-cutting and growing acceptance of online sports gambling altered the odds of Disney sticking to that stance.

ESPN and gambling company Penn Entertainment on Tuesday announced an agreement that will put the network’s famous red logo on an online sports betting mobile app and website to be called ESPN Bet.

Penn, based in Wyomissing, Pa., will pay $1.5 billion in cash over the next 10 years for the rights to use the ESPN name. As part of the deal, ESPN will promote the product across its programming and provide access to on-air talent. ESPN also has the right to purchase up to 31.8 million shares of Penn stock for $500 million over the next 10 years.

The partnership represents an about-face for ESPN, which until now has only supplied gambling information and data on its programs and digital properties. But the surge in legalized sports betting — widely accepted by the sports leagues ESPN carries — has made the gaming business hard for media companies to resist.

ESPN and Caesars Entertainment in August 2020 opened a 6,000-square foot studio facility at the Linq Hotel + Experience in Las Vegas to serve as the home of the company’s sports betting programming, including “The Daily Wager.”

ESPN is one of the best-known brands in the Disney portfolio. But the steady loss of cable subscribers and the fees they generate — a harsh fact of life across the TV industry — has turned the once reliable cash cow into a mature business considered by Wall Street to be a drag on Disney’s stock.

Iger said in an interview last month on financial news network CNBC that he is open to a spinoff of ESPN, or finding a partner to take a minority stake.

Penn will put the ESPN on the online sportsbook products that currently use the Barstool Sports brand name in the 16 states where it operates.

As Penn gets into business with ESPN, it will sell the renegade digital media company Barstool Sports back to its founder, Dave Portnoy.

ESPN Chairman Jimmy Pitaro, in a statement, called Penn “the right long-term strategic partner to build ESPN Bet into a leading U.S. sports betting platform.”

“We are confident that the combination of our unparalleled audience along with Penn’s operational expertise and state-of-the-art technology provides us with a tremendous opportunity to serve the ever-growing number of consumers interested in betting,” Pitaro said.

The announcement of ESPN’s deal comes shortly after Fox Corp. announced it will shutter its sports betting platform, which it launched in 2019. The service, called Fox Bet, failed to make much of a dent in the market.

The Rupert Murdoch-controlled company still has the option to buy an 18.6% stake in FanDuel, the most popular sports betting site.

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