Carlton makes late £400m bid for racing rights

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The Independent Online

Carlton Communications has launched a late £400m bid for the rights to broadcast British horseracing, upsetting hopes at Arena Leisure of bagging the prize.

Carlton Communications has launched a late £400m bid for the rights to broadcast British horseracing, upsetting hopes at Arena Leisure of bagging the prize.

Sources said that Arena, which owns and operates six racecourses and provides online betting services through its subsidiary Arena One, has seen its £320m offer for the media rights trumped by Carlton with with a higher bid that includes a £50m marketing spend.

Carlton refused to comment yesterday, but a source within ITV said: "Carlton is interested in rights and in content, and I think it could be very good for racing."

Arena had expected to discover this week whether it had won a period of exclusivity to finalise a deal, which would include the rights to broadcast via the internet and interactive television. However, Carlton's late entrance into the field now seems set to lengthen the race.

Rights have been held by the BBC and Channel 4, but a new package will shortly be up for grabs when these contracts end. The rights are sold by the Racecourse Association, which represents the interests of the UK's 59 racecourses.

Carlton spends £200m a year on making sports programmes including Grand Prix and outside broadcasts for Sky's Premier League matches. The ITV source said: "Carlton has the advantages of a huge infrastructure, mass exposure through TV to bring a big audience to racing, a subscription channel [ONdigital] for people who want to watch a lot of racing, and the ability to deliver interactive services and allow people to place a bet as they watch."

He said that if it won the bid, Carlton was likely to negotiate with the BBC and Channel 4 to promote a mix of races across different types of channel.

Carlton is meanwhile pushing ahead with plans to sell Technicolor, the film processing and duplication company, despite the collapse of the planned merger with United News & Media.

Executives at Carlton and UBS Warburg, the investment bank advising on Technicolor's sale, say "several" bids are being considered. They remain confident about affecting a sale by year end, perhaps to coincide with Carlton's annual results presentation in early December.

Trade bidders are thought to include Time Warner, Matsushita Electric Works and Cinram International of Canada. Financial buyers are believed to include Bain Capital, leveraged buyout firm KKR and CinVen, the pension fund management arm of the former British Coal.

Estimates of Technicolor's value vary from £900m to £1.7bn, an unusually wide range given that the business has been formally up for sale since April and known to be coming on the market since last November when Carlton and United agreed to merge. Said one analyst, commenting on the valuation range: "It basically moves with how volatile the video release market is."

Another factor in the uncertain valuation is concerns about the film replication arm's long-term growth prospects. Some analysts believe that replication is ex-growth, due to the technological threat of digital distribution to cinemas, although Technicolor and Texas Instruments have formed a joint venture which is expected to trial a digital delivery system next year.

In the year to September 1999, Technicolor generated at operating profit of £149.2m on sales of £908m. Carlton bought the business in 1988 for $780m (£538m).