Billionaire investor Len Blavatnik is set to inject more capital into sports streaming platform DAZN, redoubling his commitment to the lossmaking group less than three months after wiping its debt, according to two people with knowledge of the matter.
DAZN could raise around $140mn from Blavatnik’s Access Industries, the people said, although one cautioned that the final figure could change. The capital injection will take the form of equity rather than debt, the people said, although Access is yet to rubber stamp the move. The additional firepower could be used to fund rights fees or expansion into new areas, according to one of the people.
The UK-headquartered streaming group has committed billions of dollars to buying the broadcast rights for elite-level European football matches and boxing bouts in an effort to challenge the traditional broadcasters that dominate sports.
However, the fundraising comes as Wall Street has soured on streaming companies in the past few months, shrinking the market value of Netflix and Spotify as investors question the durability of the business model.
Access did not respond to a request for comment. DAZN declined to comment.
The move shows Blavatnik’s continued willingness to fund DAZN, which has not turned a profit since launching in 2016. Blavatnik and DAZN in February agreed a $4.3bn refinancing that left the company debt free. At the time, the billionaire injected $250mn of fresh equity capital.
Led by chief executive Shay Segev, hired from UK gambling group Entain, DAZN this month confirmed plans to enter the betting market. The group has also signalled its intent to expand into gaming and digital assets known as non-fungible tokens.
Research group Kagan estimated DAZN had about 7.6mn paid subscribers at the end of 2020. DAZN does not publish subscription figures, but in February the company said its “revenues and subscriber numbers continue to grow strongly”. A person close to the company said it has more than 11mn subscribers globally.
Blavatnik has made billions of dollars thanks to the streaming-fuelled revival of the music industry. The billionaire acquired Warner Music for $3.3bn in 2011, when music was in the throes of a piracy crisis, but he benefited as the sector bounced back. Warner now trades publicly at a valuation of around $15bn.
Yet Netflix’s stock price crash has fuelled fears across the entertainment industry that streaming will never be as profitable as traditional television.
Although DAZN’s annual revenue rose to $871mn in 2020 from a restated $819mn for 2019, the group recorded pre-tax losses of $1.3bn in the first year of the pandemic due to disruption to the sporting calendar.
James Rushton, cofounder of DAZN, has argued that his start-up has not been afforded the same investor tolerance for heavy costs as that of Netflix or Spotify. “If we were like a Silicon Valley sort of growth business, people would focus less on the fact that in order to become the primary broadcaster [in Japan or Spain] . . . requires an incredible amount of initial investment”, he told a Financial Times conference last month.