The UK racetrack operator Arena Racing has established a joint venture with Racecourse Media Group (RMG) to license pre-race data on horse races. This connection between the owner of Turf TV and Arena Racing, the largest racecourse operator, does not bode well for Satellite Information Services (SIS), the current supplier of Arena’s 15 racecourse pictures to betting shops. Arena controls 39% of all racecourse fixtures.

The current contract between SIS and Arena expires in 2017 and without Arena’s fifteen courses you have to wonder whether SIS will have a business at all. The big question is: will Arena sign with RMG or SIS after 2017 and, if it goes with RMG, what will be left of SIS?
SIS does, however, have Bookmakers’ Afternoon Greyhound Services (BAGS) supplying live greyhound racing to the UK’s 8,500 betting shops. It is questionable whether bookmakers would want to maintain the duplicity of cost for two services. 

The other issue is that the horse race betting levy applies to horse race bets only and with racing (RMG) in control of the pictures they are most likely to be incentivised to provide as little dog racing as possible. Something the bookmakers would not like. Greyhound racing is useful to bookmakers during the UK’s dark winter afternoons when horse racing (by and large) does not take place. In addition, horse racing is subject to the vagaries of the UK’s winter can make the product unreliable.
Could it possibly be the case that if Arena does sign with RMG the bookmakers who control BAGS might do the unthinkable and sign with RMG as well? 
This now becomes interesting. The competition between RMG and SIS has bid up the horse racing rights beyond the true value of the product. A monopoly would be created if RMG managed to sign up Arena bringing an end to the competitive bidding war. On the face of it Arena would lose out as they would only have one company to sell to. But would they?
What would RMG be able to offer Arena and all other racecourse in exchange? RMG would be constrained in what it could charge being a monopoly provider. It must not abuse its dominant position in the market place. A fee based on a royalty, something like we see in the music industry where premises pay on square footage might pass an OFT enquiry.
If Arena does go with RMG then the lawyers are going to be busy.
SIS has had a run of bad luck in recent years. SIS paid millions for the BBC’s outside broadcast (OB) unit making SIS the number one outside broadcast company in Europe. SIS successfully worked for SKY, ITV, as well as the BBC covering prestige events such as the Queen’s Jubilee, the 2012 Olympics and the European Football Championship.
All was going well for the OB unit SIS Live when the BBC decided to put all their work out to tender in ten separate segments. The consequence of which is that in October 2013 SIS decided to pull the plug on outside broadcasting altogether from March 2014. 
According to SIS emailed customers to say “The Outside Broadcast (OB) market, as it is today, no longer offers an arena in which we would wish to continue to operate. We have therefore decided to withdraw from the OB sector.”
The SIS Live coverage of the 2010 Commonwealth Games in Delhi was met with great success. SIS was able to bring high definition pictures for the UK coverage but after the games the wrangling over payment began. India refused to pay the balance on the account which ran into millions. So heated was the exchange between the parties that UK Prime Minister David Cameron intervened when he met the Indian Prime Minister.
By 31st March 2013 40% of the contract had not been paid and while arbitration proceedings are taking place a provision in the accounts of £5.9m has been made.
Then there was the move to Media City, Salford where the BBC relocated following the Labour Government’s protestations that the BBC was too London focussed. No doubt SIS must have thought its close proximity to other media companies would hold it in good stead to win contracts.
The charge to the accounts for the relocation to Media City amounts to £3.8m in 2013 and £2.4m in 2012. 
SIS is owned by Ladbrokes 23%, Caledonia Investments 22.5%, Catalyst Media Group 20.5%, William Hill Organisation 19.5%, Fred Done 7.5% and Tote 6% (Fred Done).
SIS has, over the years, rewarded its shareholders very well paying huge dividends, much to the angst of the independent bookmakers who were never offered a shareholding from inception in 1986.
Dividends paid in 2013 amount to £15m on a group profit of £20m compared to a profit of £18.6m in 2012 with a dividend of £12m. In two years SIS has paid £27m in dividends. 
William Hill and Ladbrokes have been major beneficiaries in the past. But if SIS fails and their holdings have been valued to the recent sales of shares in SIS then write downs in the accounts are a possibility.
If SIS loses Arena expect a “quad whammy” accumulator for the bookmakers: no future dividends, costs incurred to wind down the company, write down in their accounts on lost value, increased fees from RMG.
Will SIS survive? Extel who provided services to bookmakers prior to SIS lasted 25 years. If Arena signs with RMG, SIS will have lasted around 30 years. 
Nothing lasts forever.
Turf TV’s (now owned by RMG) big lift off was when Coral signed up for the service just before Christmas 2007 at a deeply reduced discount. At the time Coral must have thought Father Christmas had delivered them a big present. I doubt they think that now.