Deadline Looms for attheraces, Still No Deal(s)

19 March 2004

With 10 days left to renegotiate broadcast rights in the United Kingdom, the attheraces consortium could be in for major changes.

British publications are reporting that one of the founding shareholders, Channel 4, could be pulling out of the partnership, putting the long-term future of the consortium in doubt. Officials from Channel 4 aren't commenting on the development.

In January, the conglomerate of Channel 4, BSkyB and Arena Leisure announced that its 10-year deal with the Racecourse Association (through which attheraces has broadcast rights to racing in 49 of England's 59 tracks) will be terminated after one year. The group gave 90 days notice and said on March 29 that it will no longer carry races from the leading tracks in the United Kingdom.

attheraces said it would instead negotiate new rights deals with the individual tracks, but no new deals have been struck.

Talks are ongoing, but some tracks aren't happy with attheraces after it walked away from a £307 million, 10-year deal.

Some tracks have argued they have been "misled" during the negotiations for new media rights deals, but management for attheraces says this is not the case.

The allegations stemmed from reports that Channel 4 is trying to get out of the consortium, while officials with attheraces have tried to create a united front for current negotiations.

attheraces issued a statement on Thursday denying tension between Channel 4 and the other shareholders, but did confirm that it was in talks with technology company SIS, which could take over the broadcast rights.

"We can confirm that discussions are taking place between the company, SIS and other parties on a number of fronts," the statement read.

A channel editor with Highflyer, which produces the output for attheraces and is a chief competitor of SIS, told the Daily Telegraph that attheraces was on the verge of massive changes.

attheraces acknowledge that it was in talks to formulate a transition plan as the deadline to renegotiate approaches.

"Racetech, Highflyer, the BHB and many of the racecourses have been made aware that discussions are ongoing," attheraces stated. "As such, any accusations that attheraces is misleading racecourses are without foundation."

The issue came to the forefront this week as one of England's biggest racing events, the Cheltenham Festival, got underway. The Festival concluded Thursday, and officials with attheraces and other companies used the time to increase talks in hopes of reaching an agreement.

Ian Hogg, managing director of attheraces, is hoping the companies can come together for the best interests of U.K. horseracing.

"I call on all parties involved to redouble their efforts to conclude the negotiations and to safeguard the channel's dedicated coverage of U.K. racing," he said.

Not only would the loss of a dedicated channel be a blow to the 49 racetracks (which have only received £100 million of the £307 million), but coverage could be changed on terrestrial TV as well.

Under the initial deal, the BBC was allowed to negotiate rights for its chosen events, including the Grand National and the Derby, while Channel 4 retained terrestrial rights to more than 90 days of racing every year, including the Festival. The division amounted to a "gentleman's agreement" which appeared to suit all concerned.

One of the agreements rumored to be reached during Cheltenham would see Arena and Sky take over Channel 4's share of the company.

Financial details are yet to be finalized, but the racecourses are unlikely to get any additional money and will have to settle for a share of eventual interactive betting profits.

If indeed that does happen, Channel 4 would likely find itself in a bidding war with its former partners for the broadcast rights of certain aspects of U.K. racing.

But if negotiations sour on Channel 4, the broadcaster said it could walk away from racing all together, meaning no terrestrial station in the United Kingdom would have horseracing coverage in its programming.

Channel 4 has made it clear to Racecourse Holdings Trust, the 12-track consortium of which Cheltenham is part of, that without the Festival it will withdraw from racing altogether.

The BBC has carried the Grand National for 44 years, but ITV confirmed it is in serious talks with Grand National to pick up those rights.

The attheraces deal seemed like a win-win for all sides, with the consortium paying £307 million and increasing coverage for the racing--ultimately resulting in increased gambling revenue from interactive betting.

In reality, though, the turnover in betting hasn't measured up, as competition in the Internet space continues to rise and betting exchanges see more and more punters turning to them for race betting.

Hogg is still hopeful for agreement.

"The shareholders are negotiating, and once they have agreed a position we will make an announcement and put a planning process that keeps the channel on air and the shareholders happy," he said. "In general, discussions with many of the racecourses have been positive, although much work is still required to achieve a satisfactory conclusion before March 29, which includes reaching an agreement with the BHB in respect of overseas data rights."