Every new programming venture is viewed as something of a
gamble. There's always the risk that operators won't sign up for the service, or that
subscribers won't bite once they do.
But for two new horse-racing channels launching this year,
gambling is central to the game plan.
TV Guide Inc.'s new TV Games Network (TVG) is set to launch
late next month following successful trials with 1,500 racing fans in a Kentucky cable
system.
TVG plans to share a cut of revenues from wagering and
advertising with its cable and direct-broadcast satellite affiliates, CEO Mark Wilson
said.
"We're led to believe that we can have an enormously
profitable business here," TV Guide chairman Joe Kiener said.
And Toronto-based American Digital Communications Inc.
announced earlier this month that it will migrate its four-channel TrackPower horse-racing
service from the medium-power SkyVista satellite service to EchoStar Communications
Corp.'s Dish Network platform in July.
The idea is to make the service, which launched in April,
more accessible to consumers.
NEW DISH NEEDED
A Dish Network spokesman said the service would be
broadcast from a high-power EchoStar satellite at 61.5 degrees west longitude, meaning
that subscribers would need a second dish to subscribe to both TrackPower and the core
Dish Network video service.
TrackPower plans to swap out any SkyVista equipment for
Dish Network hardware for its several-hundred current subscribers at no charge, CEO John
Simmonds said.
EchoStar won't see a share of TrackPower's wagering, he
added.
The race is on to attract serious horse-racing fans to the
services. The two services differ in a number of ways.
TrackPower carries a $19.99-per-month subscription fee for
four live racing feeds, although Simmonds suggested that the company would discount the
cost "quickly and dramatically."
TVG, on the other hand, will ask cable operators and DBS
providers to include its network in their analog or digital packages for no additional
fee. Unlike TrackPower, however, TVG will charge a transaction fee of 25 cents per wager.
Initially, TVG's subscribers will wager over telephone
lines, although Wilson predicted that the company would unveil remote-controlled wagering
over digital set-tops early next year.
TrackPower subscribers can buy a Dish Network
"DISHPlayer" -- which includes a Microsoft Corp. WebTV Networks
Internet-over-television device -- and use that receiver's keyboard for interactive
wagering.
The DISHPlayer's picture-in-picture functions also allow
viewers to watch races and call up WebTV screens to check racing stats simultaneously.
TVG has signed 10-year, exclusive contracts with 22
racetracks across the country, including Belmont Park, Saratoga Race Course and Churchill
Downs.
TrackPower is negotiating with a few-dozen other tracks,
and it has already announced its first 13, Simmonds said.
SIMULCAST SHOW
TrackPower is limiting its programming to live races 12
hours per day. "We deliver exactly what you see at the racetrack, in simulcast,"
Simmonds said.
To help broaden the appeal of the sport, TVG plans to
spruce up the production value beyond what's seen on racetrack monitors. Early this month,
the network signed Fox/Liberty Productions to produce its hosted racing shows.
Wilson said he sees the productions as "a blend
between ESPN and MTV: Music Television."
To appeal to amateurs, there will be two announcers for the
races: one a racing expert, the other not. "Racing terminology is only understood by
5 percent of the U.S. population because the sport is not given enough television
exposure," Wilson said.
Internal research at TVG indicated 60 million Americans who
are potential racing fans.
If a certain percentage of those viewers don't make regular
wagers, it won't necessarily threaten the network's business model, because TVG plans to
make money on advertising, as well.
Eventually, TVG will also expand the programming on its
24-hour network, adding other equine sports such as polo, Wilson said, likening the
concept to what's done on The Golf Channel.
"Racing is one of the last sports in the country
without a national television presence," he added. "This is a way for racing to
catch up."
TVG and TrackPower both plan to follow any laws regulating
horse racing. Wagering on horse racing is illegal in seven states, and only a handful of
states can accept out-of-state wagers. But most states allow their constituents to place
out-of-state bets.
"We're treading very carefully to make sure that we
stay within the legal restrictions and meet our social responsibilities," Kiener
said. "It will be a totally legitimate business."
COOLING-OFF PERIOD
TVG will take steps to minimize compulsive gambling, Wilson
said, by making sure all accounts are secure, taking wagers only from those over 21,
limiting credit-card spending to $250 and imposing a 24-hour cooling-off period after a
gambler passes a certain spending limit.
"With our program, you have to think about it, and you
have to have the available funds to wager," he added.
TrackPower will take advantage of parental-control features
on Dish Network hardware to make sure customers' accounts are secure.
Anytime TrackPower subscribers want to bet, they must enter
personal-identification numbers.
"It's totally within our discretion to control
this," Simmonds said. "It may seem like Big Brother is watching, but if for any
reason we don't want someone to make a bet, we can prevent it."
Simmonds predicted that TrackPower could attract 100,000
customers by the end of the year. About 500,000 people in the United States make a
full-time living in the horse-racing industry, and another 7 million are serious fans, he
added.
That market could grow with more exposure from television.
"A lot of people don't go to the racetrack because of what I call the grunge
factor," Simmonds said. "They don't like to be around the other people at the
track."
In the initial trials in Kentucky -- decidedly a
horse-racing-friendly market -- fans wagered an average of $900 to $1,000 per month,
Wilson said.
Kiener predicted that TVG would be profitable within two
years. Eventually, the network plans to use its News Corp. connections to help broaden its
distribution internationally through carriage on News-owned DBS platforms.
"Horse racing outside of the United States is even
bigger than it is here," Kiener said, adding that the company is still in the early
stages of talks for international deals.
