USTA - Magna and Churchill partner on TrackNet media

Magna and Churchill partner on TrackNet media

Monday, March 05, 2007 - Press release from MEC and Churchill Downs

North America’s leading horse racing companies, Churchill Downs Incorporated and Magna Entertainment Corp. today announced a series of customer-focused agreements.

Through the agreements, Magna Entertainment and Churchill Downs hope to accomplish four objectives:

1. Foster an open and competitive business environment where horse racing content is readily available to customers through a wide variety of distribution points and wagering platforms;

2. Create an innovation-based environment of sustainable growth for the North American horse racing industry domestically and internationally;

3. Enhance wagering integrity and security to address horse racing signal piracy and ensure content creators are compensated; and

4. Benefit the horsemen and racetracks that together create racing content through new industry growth.

The specific agreements are as follows:

Churchill Downs and Magna Entertainment have formed a joint venture called TrackNet Media Group LLC (“TrackNet Media”) through which the full breadth of the companies’ respective horse racing content will be available to each company’s various distribution platforms, including Magna Entertainment’s advance deposit wagering (“ADW”) platform, XpressBet® (www.xpressbet.com), a Churchill Downs-owned ADW platform, www.twinspires.com, under development, and to third parties, including racetracks, OTBs, casinos and other ADW providers. TrackNet Media will also purchase horse racing content from third parties to make available through Churchill Downs’ and Magna Entertainment’s respective distribution platforms. Both companies believe that a single organization performing these important functions will promote optimal distribution of content across a broader spectrum of platforms, including ADW providers, international outlets and distributors that offer rebates. By creating a single cost-effective organization to more efficiently buy and sell racing content, TrackNet Media will have the resources to pursue wagering integrity and security objectives, with a view toward generating revenue for horsemen and racetracks that create content.

“Both Churchill Downs and Magna Entertainment believe that our industry must embrace change and drive innovation to make our products more appealing to our customers,” said Churchill Downs’ President and Chief Executive Officer Robert L. Evans. “We believe that our customers and our industry will benefit from broader distribution of our racing signals and that integrity and security with respect to our signals is paramount. We hope other content owners will endorse our approach in similar reciprocal agreements with TrackNet Media to ensure the broadest possible distribution of racing content to markets worldwide.”

“To better serve our customers and grow the financial return for our horsemen, Magna Entertainment and Churchill Downs believe the time has come to make our simulcast content available through as many trusted and eligible distribution platforms as possible,” said Magna Entertainment Chief Executive Officer Michael Neuman. “In doing so, we can maximize the content available to customers and the revenue available to the horsemen and racetracks who create the industry’s content.”

In addition, Churchill Downs has purchased a 50-percent interest in Magna Entertainment’s horse racing TV channel, HRTV™. Both Churchill Downs and Magna Entertainment will work to offer as much of their respective live export simulcast content as possible on HRTV™ and will actively explore how the television medium can be used to more effectively serve horse racing customers – and the industry as a marketing vehicle. HRTV™ will seek additional content providers who wish to televise their horse racing content alongside the Churchill Downs and Magna Entertainment content.

As part of its 2007 offerings, HRTV™ will broadcast “Target Louisville,” a 30-minute television program highlighting the training, workouts and final preparations of Kentucky Derby contenders. “Target Louisville” will air daily during the week leading up to the 133rd Kentucky Derby at Churchill Downs.

“With the inclusion of Churchill Downs-owned racing content on HRTV™, this television channel becomes a significant destination for horse racing fans,” continued Neuman. “With Magna Entertainment and Churchill Downs serving as anchor tenants, HRTV™ represents a subscriber acquisition opportunity for carriers and a distribution opportunity for content providers to consider as their television rights become available.”

Churchill Downs is currently developing its own ADW platform, www.twinspires.com, which will launch later this year. The site will offer racing fans the opportunity to watch and wager on Churchill Downs- and Magna Entertainment-owned racing content as well as other racing content made available through TrackNet Media licensing agreements. Customers can visit www.twinspires.com to learn more about its future offerings and sign up for e-mail alerts. Churchill Downs will share more information about www.twinspires.com, including the target date for launch, with customers and members of the media in the next few weeks.

One of the primary focuses for the companies’ joint venture, TrackNet Media, will be enhanced wagering integrity. TrackNet Media will invest significant resources to better monitor the entities that have access to the companies’ racing content and wagering pools. TrackNet Media staff will work closely with domestic and international outlets licensed to simulcast and accept wagers on TrackNet Media-licensed products to ensure that content offered through TrackNet Media is being used appropriately and in ways that provide compensation to the horsemen and racetracks that produce the content. Third parties will not be allowed to sublicense TrackNet Media content to other tracks, OTBs, casinos, rebate shops or ADW providers, thereby reducing the risk of horse racing signal piracy and other integrity issues.

Both Churchill Downs and Magna Entertainment will continue to honor all existing contractual obligations with respect to their content. TrackNet Media’s ability to license simulcast content from Churchill Downs-owned racetracks to ADW providers other than the Television Games Network (“TVG”) will commence with the expiration of those tracks’ individual TVG agreements. TrackNet Media will have immediate access to racing signals from Churchill Downs racetrack for its 2007 Spring Meet, which begins April 28, and to signals from Fair Grounds Race Course when the track begins its 2007-08 meet in November 2007. TVG will continue to have access to simulcast content from Arlington Park through Aug. 6, 2007, and from Calder Race Course through the end of its 2007-08 racing season, which ends Jan. 2, 2008.

Churchill Downs 2007 Spring Meet will be available on HRTV™. Arlington Park, Calder Race Course and Fair Grounds Race Course will join the HRTV™ line-up as their respective TVG contracts expire.

“We believe the business initiatives we’re launching will benefit customers in many ways, including the optimal distribution of simulcast content originating from Churchill Downs- and Magna Entertainment-owned racetracks to other tracks, OTBs, casinos and ADW providers,” said Evans. “We hope other content providers and content licensees will follow our example, and make their content available as well.

“The transition to a new and more competitive business model may cause some temporary disruptions for some customers. We acknowledge that and want to apologize in advance for any inconvenience to them. In the end, we believe customers will benefit greatly from the approach we’re taking, and we appreciate their patience and understanding.”

TrackNet Media will be headquartered in Louisville, Ky. TrackNet Media and HRTV™ will have offices in Louisville and Arcadia, Calif. Scott Daruty, formerly the chief U.S. counsel for Magna Entertainment, will serve as TrackNet Media’s chief executive officer. Patrick Troutman, who served as vice president and general manager for the Churchill Downs Simulcast Network (“CDSN”) and Churchill Downs Simulcast Productions, will serve as TrackNet Media’s executive vice president. Current members of CDSN’s support staff will join TrackNet Media, as will certain members of MEC’s simulcast operations.

Source: USTA Web site (03-05-07)