HRTVG?
TVG, the horse racing channel sold earlier this year when parent Gemstar-TV Guide was purchased by the digital technology company Macrovision (MVSN) , is now being shopped around to potential buyers by Swiss-based financial services company UBS, the Paulick Report has learned.
The auction of TVG gives the horse racing industry a tremendous opportunity to consolidate its convoluted and contentious cable television and account wagering system platforms that frustrate and anger horseplayers who are often required to hold multiple online or telephone wagering accounts to bet on their preferred tracks.
To seize this opportunity a group hug would be required among the major players, including Churchill Downs, Magna Entertainment and the Thoroughbred Horsemen’s Group that now negotiates account wagering contracts for most state horsemen’s organizations. With ongoing litigation by Churchill Downs against the Thoroughbred Horsemen’s Group and rumblings of a divide between Churchill and Magna on their TrackNet Media simulcast business joint venture, a deal seems unlikely at this time.
But what if logic prevailed?
The merging of two unprofitable racing channels into one could lend truth to that overused business cliché of one plus one equaling three. There is just one Golf Channel for that popular sport and one Speedtv channel to cover all motorsports. It is not logical for a struggling industry like horse racing to have two full-time cable channels, with separate management teams, productions staffs, and on-air talent.
Churchill and Magna are partners in HRTV, which was launched solely by Magna in 2003 and has been the No. 2 network behind TVG in distribution. Both TVG and HRTV are on the Dish Network and HRTV is on some cable companies, but TVG has broader cable distribution and is also on DirecTV. TVG, which launched in 1999, was owned by TV Guide before being purchased by Gemstar. Macrovision’s purchase of Gemstar-TV Guide was valued at $2.8 billion, with TVG’s value estimated at roughly $112 million, according to a report in Multichannel News, which quoted SNL Kagan analyst Derk Baine. The deal, announced last December, closed the first week of May 2008.
With credit markets tight, it seems unlikely any outside media companies would be interested in buying TVG, especially given the declining number of exclusive contracts TVG holds with racetracks and the shaky state of the racing industry. Even with the number of exclusive tracks in decline, TVG remains the market leader, both in distribution of its signal and dollars handled through its wagering platform. TVG handled $479 million in 2007 through a wagering hub in Oregon, compared with $177 million for Magna’s XpressBet and $215 million for Churchill Downs’ TwinSpires.com and affiliated companies Churchill purchased midway through the year.
Negotiations between account wagering companies have become far more contentious with the recent formation of the Thoroughbred Horsemen’s Group, which negotiates on behalf of nearly every major state horsemen’s organization. Churchill was unable to reach an agreement with the Thoroughbred Horsemen’s Group this spring and as a result could not offer online wagering on any races other than a handful of stakes, including the Kentucky Derby. That led to a significant decline in handle during Churchill’s spring-summer meeting. Account wagering on other tracks, including Churchill Downs-owned Calder in Florida and Magna-owned Lone Star Park in Texas, was shut down when the two sides failed to reach an agreement on how revenue should be distributed.
Doesn’t it make sense for the two major companies that own so many tracks (Magna and Churchill) and the Thoroughbred Horsemen’s Group to quickly come to terms on a broad-based revenue distribution formula for account wagering, then put their previous differences aside and think in terms of working together to grow this part of the pari-mutuel horse racing business.
The best way to achieve growth would be through a single cable network that carries all of the best simulcast signals and a powerful wagering platform that offers virtually every racetrack with live racing. The cable network and wagering platform could be owned by industry stakeholders, including racetracks and horsemen’s representatives, and be more widely promoted than the current patchwork of television channels and account wagering.
There would be concerns, of course, principally from owners of small racetracks who fear their simulcast signals would not get the exposure they currently get with two full-time racing networks. Other independent account-wagering companies might find it hard to compete, but anti-trust laws should prevent them from being monopolized.
It’s a long shot that industry organizations accustomed to fighting at the table over a dwindling pile of scraps can think in terms of growth and cooperation, so we can only hope that logic will someday prevail. The pending sale of TVG provides that opportunity.
Copyright © 2008, The Paulick Report
Tags: Account Wagering, advance deposit wagering, churchill downs, gemstar-TV Guide, HRTV, macrovision, Magna Entertainment, Paulick Report, Ray Paulick, Thoroughbred Horsemen's Group, tracknet media, tvg, ubs
July 29th, 2008 at 7:53 am
The multi account thing has curtailed by betting activity.
We should be able to bet any horse in the world from 1 platform.
July 29th, 2008 at 9:01 am
This would be the first really visible step in showing the fans, other sports industries and the government that the racing industry is not “dysfunction junction central” as far as trying to work together to in the same direction for the good of the sport.
Now - that said - whether or not these different little fiefdoms with their individual tin plated despotic leadership can actually implement this kind of sweeping, positive communication vision is another story! I am doubtful at best.
Thanks for the Paulick Report, Ray! Great to have you back where readers can enjoy you!
July 29th, 2008 at 9:22 am
This is a lovely notion, but the likelihood of HRTV purchasing TVG seems slim, at best. Rumors are rampant that Churchill will end its HRTV relationship with Magna when an opt-out opportunity is available, I believe after a 3-year period from when it was entered. The development of TwinSpiresTV suggests that Churchill is looking for less expensive Internet distribution and is steering away from television. As long as Robert Evans is running the show at Churchill, it looks as though the Internet is the direction in which the company will go.
July 29th, 2008 at 10:25 am
As useless as it is, why doesn’t the NTRA pony up the cash, buy the bloody thing and merge the channels. Distribute it however seems best but once you get one product the challenges of distribution are easier, no?
If their stated purpose is to market the sport, then they should take a leadership role in its distribution and would have more control over negotiating broadcast rights with any network. I hear this internet thing is pretty popular so if the distribution of races goes that way then so be it. People watching these channels are betting online anyway so the platform is there.
Or , Ray, you could buy it. I have a crisp Jackson I could throw your way…
July 29th, 2008 at 10:33 am
I think everyone might want a single racing network like an ESPN, but logistically from a content perspective its impossible. I have both TVG and HRTV on my cable provider and they have enough proprietary tracks to cover at crucial times that no single channel to watch would make anyone happy.
It’s like flights at O’Hare - you have races stacked on top of each other so that as soon as they cross the wire in one race we’d be switching frantically to another race already out of the gate. It happens already on both channels respectively - let alone having just one.
Further we all know what would happen in short order: cherry picking the races for coverage with the “rest” shown on replay or at worst just the payouts. Forget about showing the post parade or any real indepth review of the fields.
Even if you have an ESPN/ESPN2/ESPN Classic type of multi-channel (ignoring the need for good luck in convincing the cable providers to give up that much bandwidth) under one parent umbrella the ones who would lose out are the ones already getting squeezed. The Suffolk, Laurel Park, GGF, Mountaineer, and other second tier tracks would be pushed off on while the NYRA, CDI, and top tier Magna tracks get prime real estate. Think of it as NCAA coverage relative to the World’s Strongest Man, both aired on ESPN channels but clearly one is treated differently.
Do I think HRTV could benefit from the vastly higher quality production values that TVG has today? Sure. Likewise TVG could gain from the better original content programs done by HRTV. Further we all could benefit knowing big non-US racing like the Dubai Carnival or Japan Cup could be seen here in the States but those are minor points compared to the domestic logistics of daily racing.
July 29th, 2008 at 10:39 am
One positive of a merger would be it would force the major tracks to coordinate their post times.
July 29th, 2008 at 10:45 am
more racing……less talking
sounds like a can’t miss
July 29th, 2008 at 11:16 am
http://www.horseplayerinteractive.com/HPItv/HPItv.aspx
Really simple.
Show the best five tracks available, the rest for viewing on the web.
If it can happen in Canada, it can happen in the U.S.
July 29th, 2008 at 12:11 pm
I totally agree with Jason above, show the top five tracks on TV and watch the other tracks live on the web. Seems logical to me, but when did horse racing ever think in logical or long term improvements for our favorite spot? I’ve been a long time supporter of HRTV and love the well rounded programming they carry, as opposed to the bet bet bet format of TVG. Right now the disputes between the tracks and THG over the ADW revenue shares is only hurting the fans who want to bet on more tracks. In the long run it is going to hurt the tracks and the horsemen because the Internet is the logical growth area of our sport.
July 29th, 2008 at 12:13 pm
“But what if logic prevailed?”
Its pretty sad that this industry is so pathetic and dysfunctional that every possible good idea needs to be qualified with this question.
July 29th, 2008 at 12:41 pm
If the two channels were joined more races could be shown by silencing motor-mouths like Matt Carrothers. Who cares what all these talking-heads are betting on? Give us more pre-race coverage of the HORSES. When we see them saddling or on the way to the gate, bettors can make their own choices.
July 29th, 2008 at 12:53 pm
This should happen. Period. It’s what is best for Horse Racing. The people who bet, the fans and most of all the horses. It makes so much sense it’s ridiculous. But EVERYONE would have to, as was said, have a group hug and get over themselves. Not likely in an industry full of ego’s…
August 3rd, 2008 at 10:33 am
[...] this year. But the Paulick Report broke the news that Swiss-based financial services company UBS is shopping the company around to potential buyers and that it’s likely a group or individual from within the racing community will end up [...]