DraftKings' Value Diminished In Latest Fox Filing

DraftKings experienced a steep decline in valuation from one of its major investors on Monday, as Twenty-First Century Fox Inc. disclosed a 60 percent markdown on its investment in the Boston-based daily fantasy company. The report first emerged from the Boston Globe, as Fox's latest filing with the Securities Exchange Commission established the company's position. Following a deal in July of 2015 which saw Fox invest approximately $160 million in DraftKings, the investor now reports to have seen a loss of $95 million in value. Fox didn't go into detail explaining exactly why such a drastic decrease in value occurred, though it is potentially linked to the ongoing questions of legality that hover over the daily fantasy industry as a whole. Here's the SEC filing in which Fox declared its 60-percent markdown: During the six months ended December 31, 2015, the Company invested approximately $160 million in cash for a minority equity interest in DraftKings, Inc. (“DraftKings”), a leading operator of online fantasy games and contests. The Company accounts for this investment at cost. Contemporaneous with the Company’s investment, DraftKings, as part of their wider media program, committed to spend a minimum of $250 million for media placements on the Company’s properties through December 2017. As of December 31, 2015, based on information concerning DraftKings’ current valuation in a recent financing transaction, the Company determined that a portion of its investment in DraftKings was impaired and recorded a loss of approximately $95 million in Other, net in the Unaudited Consolidated Statements of Operations for the three and six months ended December 31, 2015. While the fight over daily fantasy's legality has been most publicized in New York, it continues to be prevalent in various forms in many states. This, together with uncertainty from payment processors, has slowed what was once exponential growth for the likes of DraftKings, as well as its chief daily fantasy competitor, FanDuel. Having been concluded in the summer of 2015, DraftKings' deal with Fox was predicated on a then-valuation of over a billion dollars. That number has already taken quite a toll, undoubtedly helping to trigger Fox's revised number in the filing. And as DraftKings eyes any further funding, industry experts theorize a potential down round. Image via DraftKings Correction: The initial version of this story incorrectly described the 60-percent markdown as a loss for Fox.