03/08/2007 12:00AM

TVG's future may hinge on New York


NEW YORK - The battle for the New York Racing Association franchise in the coming months now appears likely to determine not only the future operation of racing in the state, but also the landscape of televised racing and account wagering across the country - and specifically the survival of the Television Games Network.

The announcement this week that the Churchill Downs tracks are phasing out their relationship with TVG in favor of a partnership with Magna Entertainment, including the formation of cooperative television and home-betting platforms, leaves TVG with a vastly diminished broadcast package. It was rough enough for TVG to get through the winter months without access to the popular signals from Gulfstream Park and Santa Anita, both owned by Magna, and a further blow when independent Oaklawn Park fled TVG this winter for HRTV, which will now be co-owned by Churchill and Magna.

Now, with the loss of the Churchill Downs signal this spring and those from its tracks such as Arlington, Calder, and Fair Grounds as contracts expire in 2007, TVG's primary asset is its exclusive contract to broadcast NYRA's races outside of New York. That contract, however, expires along with the NYRA franchise on Dec. 31, 2007, and at least two of the leading bidders are highly unlikely to renew it.

Empire Racing Associates' partners include Churchill and Magna, each with a 6.1 percent interest in the venture, and it's safe to assume that the NYRA signal will move to HRTV if it becomes the Empire signal.

Excelsior Racing Associates, the non-binding franchise choice of the state's Ad Hoc Committee, repeatedly referred in its proposal to using the YES Entertainment Network, which currently broadcasts Yankees and Nets games, for New York races.

TVG has tried to downplay the loss of the Churchill signals, saying that they currently account for under 15 percent of its business. The loss of New York, though, could prove fatal. Churchill, Magna, and NYRA combined account for about 75 percent of the annual racing handle and the overwhelming majority of the sport's most important and popular races. A racing network without those daily signals - with the Triple Crown, Breeders' Cup, and other premier events already contracted to ABC, NBC, and ESPN - would be a little bit like a national baseball network that was missing the American League, National League, playoffs, and World Series.

Despite recent growth in its handle, TVG has lost at least $100 million since its inception, a loss that its parent, Gemstar, was willing to sustain on the theory that the channel would eventually gain the critical mass to become the dominant network and offsite wagering platform. Now things seem to be headed in the opposite direction.

TVG has always been a love-it-or-hate-it proposition among racing fans, due to its stubborn or determined adherence to designing its presentation for casual fans and theoretical newcomers rather than the information needs of existing customers. People who never had access to in-home racing think it's a godsend, while critics find it unwatchable without a mute button and prefer the track simulcast feeds available in New York, Pennsylvania, and over the Internet.

As a result, much of the debate about TVG's suddenly precarious position has focused on the network's tone and content choices, but this is a side issue. The Churchill-Magna partnership was inevitable and boils down to one simple principle: Eliminating the middleman.

In TVG's early days, it positioned itself as having proprietary technology and a unique ability to gain carriage on major cable systems. Individual tracks considered launching a television and betting platform beyond their capabilities, and the National Thoroughbred Racing Association tried to make TVG an industrywide endeavor. Magna was the primary holdout, going its own way with HRTV, while Churchill stuck with TVG through a series of short-term contracts, waiting for the market to settle and the costs of entry to come down. Now both companies have made an economic decision that they can do better by cutting TVG out of the equation entirely.

The question now is whether HRTV gains the widespread carriage and the market dominance TVG once was on the brink of, or whether TVG can still make a competitive go of it with a handful of independent tracks. The answer probably lies in where the races from Aqueduct, Belmont, and Saratoga will be broadcast starting January 1.