ESPN's Sports-Betting Deal, Bracing for Disney Earnings, China Deflation 8/9/23

SPEAKER_1 (0:00)

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David Faber (0:31)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:36)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Pretty steady pre-market after Tuesday's attempt at an afternoon rally.

China does slip into deflation for the first time in two years. Is that a tell for our own CPI print tomorrow? Ten-year 402 Our roadmap begins with deflation concerns in China. Consumer price is falling.

Big news for one of the world's largest economies.

David Faber (1:01)

Disney also in focus. It's ahead, of course, that will be its after-the-bell earnings report. But the company's ESPN unit is striking that potentially $2 billion sports betting deal with Penn Entertainment.

We will also keep an eye on Eli Lilly Stock's record run. This follows yesterday's incredible rally, of course, sparked not just by strong sales of its diabetes drug, but of course, as we know as well. A very encouraging study in terms of the broader impact of those weight loss reduction drugs. Also an upgrade this morning as well.

Jim Cramer (1:32)

Jeff Reiss, thank you.

Carl Quintanilla (1:34)

Let's start with Disney, though, and that ESPN sports betting deal with Penn. Jim, it sounds like this morning, at least from Twitter, that you wonder why the market's not making a bigger deal of it on the Disney side.

Jim Cramer (1:43)

Yeah, because I think that one of the things that has been... There's 55 million people who play fantasy, all right? What people usually do is they have their line up, they put their team on the ESPN site. But then they go to DraftKings to play Daily Fantasy. And Daily Fantasy is just huge in this country. Now you... I think Jason Robbins does a fantastic job at DraftKings, and remember, Disney had a big 8% stake. But now I think you'll stay on the Disney ESPN site to do your gambling. And that is very powerful.

And I think it's just money.

Man or from heaven?

Carl Quintanilla (2:21)

Is it bad news, zero sum for Caesars and DraftKings?

Jim Cramer (2:27)

Really?

Carl Quintanilla (2:28)

Those deals probably get phased out.

Jim Cramer (2:30)

Well, Disney's probably going to have to sell at stake, which is one of the reasons why... Oh, DraftKings got upgraded to it, but one of the reasons why DraftKings is down. DraftKings does have tremendous market share.

And by the way, Penn Nat has like horrible market share. So, I don't know, in order to get market share, what you have to do is you have to have something proprietary. And the only thing I see that's proprietary that Disney has, frankly, is Adam Schefter from ESPN.

David Faber (2:57)

You know, my understanding is Penn, as you might have expected, has talked to any number of potential partners on this, especially in light of the fact that Dave Portnoy, as he has admitted, was basically an impediment to them getting licenses in certain places. I mean, that partnership, so to speak, did not work for Penn.

Jim Cramer (3:14)

It would seem.

David Faber (3:15)

They got some market share, but really, Portnoy in particular seemed to be an impediment to them getting...

Jim Cramer (3:21)

Well, you know who it did work for?

David Faber (3:23)

Portnoy.

Yeah. I mean, you're talking about getting pantsed.

Jim Cramer (3:28)

Oh, my God, he pantsed Snowden?

David Faber (3:30)

He gets...

Jim Cramer (3:30)

Oh, come on, Chase.

David Faber (3:31)

Who?

Jim Cramer (3:32)

The CEO of Penn.

David Faber (3:33)

Oh, CEO of Penn. I know the chairman. But he gets control of his company back entirely, and then if he ever does sell it, which he says he never will, they get 50% of the proceeds. Meanwhile, Penn is shelling out a good amount of money for this opportunity to partner with ESPN.

Jim Cramer (3:48)

Maybe Disney can do that dividend after all.

David Faber (3:50)

$1.5 billion over 10 years, so it's $150 million at the very least that will be sort of marketing the ESPN brand. It's unclear exactly how they're going to roll this out. Apparently, Penn does have a new tech stack, I'm told. You can see the stock is responding very positively to this.