For Sale

by Ed Meyer

posted on November 24, 2008 in General Discussion, News | No Comments >>

TVG, the nation’s first horse-racing cable-television channel, is for sale.

Louisville-based Churchill Downs Inc. won’t say whether it’s looking to buy the network, as is widely speculated in the industry. In his most recent public comment to investors and analysts, Churchill Chief Executive Bob Evans was coy when asked whether the company had expansion plans.

“We’ve been pretty conservative with our balance sheet, and that has left us in a pretty strong financial position,” Evans said. “We’ve got the resources to pursue growth opportunities, and you can find whatever meaning you choose to find in that.”

Regardless of whether Churchill is the eventual buyer, TVG’s new owner will immediately become a major player in the thoroughbred industry, owning what is currently the largest U.S. account-wagering company that can take bets on its Web site and by telephone.

“It’s been a huge source of revenue for the track as well as our purse fund and so we’re keenly interested in what happens”, said Bob Elliston, president of Turfway Park in Florence, Ky. Turfway contracts with TVG for account wagering and to broadcast its races.

Elliston, who also is executive chairman of the National Thoroughbred Racing Association, credits TVG with “getting the racing product in front of new eyes, potentially new fans, by delivering it in their homes.” “What transpires with that with the new owner, I think, is critically important to Turfway Park,” he said, “but it’s also critically important to the entire industry.”

The new buyer could be a catalyst for addressing issues that have frustrated bettors the past two years — disputes among national account-wagering companies over content sharing, and arguments between tracks and horsemen over how to share revenue from account wagering.

The dispute among the companies has meant that many customers needed multiple accounts with different companies, to bet on races at all their favorite tracks. The dispute among horsemen and tracks has resulted in some racing — including Churchill Downs — not being made available to national account-wagering platforms.

Elliston said he hopes the sale of TVG helps settle the logjam, noting there has been some movement recently with a horsemen’s deal in Louisiana, that made races at Churchill-owned Fair Grounds Race Course & Slots in New Orleans available on most major account-wagering platforms. TVG elected not to take the races. A similar California deal last week put Hollywood Park races on the major account-wagering services.

“The industry needs to make it as easy we can on the consumer and the fan base to interact in our business — that needs to happen,” Elliston said.

Account wagering is the industry’s hope to increase betting and find new customers. It represents the only growth segment in a pari-mutuel market that, before this year’s economic slump, had been stagnant for years and is now declining.

TVG is unique in that it is both a television operation and an account-wagering platform — where online and telephone bettors deposit money in advance. Its national competitors, Youbet.com, TwinSpires and Magna Entertainment Corp.’s XpressBet, are account-wagering companies.

Magna and Churchill are co-owners of the competing HRTV cable channel, which is available in fewer homes than TVG.

TVG, which stands for Television Games Network, went nationwide in 1999 from its roots as a test concept in Jefferson County. Initially available in 1.1 million homes, it’s now in 30.6 million homes in 16 states, and last year handled about $480 million in bets.

Last year, XpressBet handled $177.2 million in wagering, while TwinSpires.com, which was not in operation for the full year, finished 2007 with $88.6 million in bets. TVG has been on the market since shortly after Macrovision Solutions bought Gemstar-TV Guide last year.

“Despite the challenging economic environment, we are making progress with our divestitures,” Fred Amoroso, Macrovision’s president, said in a conference call with investors and analysts earlier this month.

Earlier this year, Amoroso cited a 9 percent increase in second-quarter wagering from 2007 to “demonstrate the potential of the asset in the hands of a buyer who may choose to follow with (a) more aggressive market expansion strategy than we are currently pursuing.”

Amoroso said at the time that the sale of TVG and other property could produce between $350 million and $550 million.

Churchill’s Evans also has questioned whether television or Internet TV is the best format to increase betting long term. Churchill invested in the HRTV network for the immediate future.

Elliston said he believes television is critical to getting the product in front of viewers and bettors on days other than those with major stakes races, and the networks need to be compensated by the industry for that expense.

“Whatever the ultimate solution, I hope that we get there quickly because we cannot afford to alienate that segment of our current fan base and not utilize that channel to draw new fans to the sport,” Elliston said. “It is something that we have going for us.

“I’m not, unfortunately very confident that we have a whole lot of other things … going for us.”

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