Stuart S. Janney III: Our sport is very fortunate to have an avid racing fan in a senior programming position at a major network, and that's exactly what Mike Mulvihill is. He's here at the conference — he was here at the conference in 2013 when he announced the debut of The Jockey Club Tour on FOX, a series of nationally televised races highlighting the best of the handicapping ranks. He's continued to add horse racing programming, including extensive coverage from Belmont Park and Saratoga to the inventory of FOX Sports properties. Today he's going to provide some insights on the intersection of sports television and wagering.
Thank you, Mike.
Mike Mulvihill: Thank you, everybody. Please be seated. Thank you, Mr. Janney, for that very kind introduction. And thank you, especially, to my friend Jim Gagliano for giving me an excuse to come back to my favorite venue in American sports, to reconnect with old friends, make a few new ones, and maybe even cash a couple tickets while we are here. Stranger things have happened.
There will never be another June 9th, 1973, when Secretariat redefined the boundaries of what's possible on a racetrack. There will never be another May 20th, 1989, when Sunday Silence and Easy Goer treated us to a Preakness that the immortal Joe Hirsch once told me was the greatest race he ever covered. There will never be another June 6th, 2015, when American Pharoah ended our 37-year wait and showed that he was, in Larry Collmus' memorable phrasing, finally the one.
There will never be another now. That simple idea that there will never be another now is what makes both the business of sports television and the business of horse racing so special, so valuable, and so much fun. Nothing else in the world can match the ability of live sports to bring so many people together as it happens. See it now, bet it now, or regret missing it forever. That's the power of now. And at every event we produce, our goal at Fox Sports is to unleash the power of now with our famous FOX attitude to unite fans forever.
My name's Michael Mulvihill. I'm the head of Strategy and Analytics for FOX Sports. And I'm very proud to be here today to tell about our company, our plans around legalized sports wagering, and our vision for the future of racing on national television.
I would like to begin by spending a few moments talking about the state of the television industry, how it's evolving, and why we believe we're currently undergoing a transformation that will ultimately benefit all of us who are in the live sports business.
The single most essential trend in our business, the trend that we emphasize above all others when my colleagues and I speak at events like this to all of our contents partners, is the evolution of the entire video industry into two distinct marketplaces: An on-demand content marketplace and a live content marketplace.
The on-demand marketplace is defined by streaming services, like Netflix, and by time-shifted viewing via your set top DVR, and it's all about consumer choice, flexibility, and very often avoidance of advertising.
The live content marketplace is defined by companies like FOX and others and it's all about live sports and news content viewed in real time that delivers unmatched scale.
The bifurcation of the video market into live and on-demand has transformational implications for our industry. And indeed I would suggest to you that the 71 billion dollar-transaction that we closed this spring in which Disney took control of FOX's scripted entertainment assets is in many respects an acknowledgment of this new reality. In that transaction the entertainment assets that were formerly part of 21st Century Fox moved to a company where they could be better used to create competition for Netflix in the on-demand world at gargantuan scale. And the transfer of those assets left our company, since rechristened FOX Corporation, smaller, more agile, and clearly more focused on our leadership positions in 24-hour news and premium live sports, which are precisely the types of content that we believe will continue to drive value on traditional television.
Let me give you just a few facts on the importance of live sports content in this changing television environment. As ratings for entertainment programming have fragmented and fallen, which is a trend that now dates back almost 40 years, the highest end of our television marketplace has come to be almost completely defined by live sports.
20 years ago only 25 of the 100 most watched shows of the year were live sports events. By last year that figure had ballooned to a remarkable 88 of the top 100. Live sports now truly stand alone as the only type of content that allow marketers to build reach quickly.
That trend extends to the world of horse racing. With 16.4 million viewers, this year's Kentucky Derby on NBC ranks as the 77th most watched show of the last 12 months. If we go back a generation, 25 years earlier, the 1994 Kentucky Derby failed to rank among the 3400 most watched TV shows of that year. So in a generation the Derby has improved from being not especially close to being in the top 3000 to now being solidly among the top 100.
The value of events like the Derby has increased dramatically as the video landscape has evolved. And I believe the value of the jewel events in racing and across all sports will only continue to increase in the years ahead. I — frankly, I think it's foolish to think otherwise.
At FOX an incredible 72 percent of all our viewing is viewing of sports programming. Among the four major broadcasters, FOX is by an enormous margin the one most reliant on sports programming to drive our business. And that's exactly where we want to be because we believe so strongly in sports as the primary driver of our future value.
As we approach the new football season, I believe that our position as the leader in live sports events affords us a unique opportunity to also become the leaders in using television as a way to take advantage of the expanding legalization of sports wagering. On May 8th of this year FOX Sports and the UK-based gaming company, The Stars Group, announced the formation of a new partnership called FOX Bet that will seek to combine the unmatched power of our live event television properties with TSG's best-in-class capabilities in developing mobile gaming products in territories around the world.
The opportunity presented to us by legal sports wagering and iGaming is simply massive and FOX Bet will be a trailblazer in utilizing the strength of a major media company to develop this enormous potential with digital first products. Estimates are that by 2025 sports wagering in this country will be close to a 7 billion dollar market with an additional billion being spent on marketing and sponsorship. In time, the expansion of legal wagering will drive fan engagement, and in turn viewership, and will become an explosive growth category for sports advertising at both the local and national levels.
As you may have heard, we will soon launch two apps that will mark our entry into this exciting new space. We'll have a free-to-play app available to sports fans nationwide in which fans will have a chance to win cash prices without risking any of their own money, by correctly picking the results of multiple games or correctly forecasting multiple elements of a single FOX Sports event.
We will also simultaneously launch the FOX Bet app in states that have legalized sports wagering statewide via mobile devices. And while that will be a relatively small number of states in 2019, we're obviously taking a long view of this market and we expect to be well positioned as mobile wagering is adopted in many more states over the next decade.
FOX Bet and our free-to-play offering will be aggressively promoted in our highly rated sports programming. And I believe that the power of our television offering will enable our sports gaming brands to very quickly establish themselves as two of the most recognized gaming brands notice U.S.
Now, all of this, of course, brings us to horse racing. And our vision for using the mainstreaming of sports gaming as a rising tide on which we can elevate the day-in-day-out coverage of Thoroughbred racing. Following the overturn of PASPA last year, which has, I'm sure all of you know, created a roadmap through which the states could chart their own course in sports wagering, FOX Sports made a significant commitment to horse racing with an eye toward integrating our racing coverage into a broader sports gaming strategy. Our partnership with the New York Racing Association is delivering over 400 hours of live racing content to nearly 60 million homes on Fox Sports 2 this year. And next year that figure will expand to nearly 700 hours. The vision for daily horse racing coverage that we have developed in collaboration with Dave O'Rourke and Tony Allevato of NYRA is already on display every day during the Saratoga Meet in our Saratoga Live shows on Fox Sports 2. And I want to briefly thank the sponsors whose support allow us to do Saratoga Live every day. Claiborne Farm, Jim McIngvale and everyone associated with Runhappy, and of course, our friends at America's Best Racing. Thank you all.
By focusing on the country's premier race meet and elevating the quality of the daily production closer to what viewers are accustomed to seeing for graded stakes races on NBC and NBCSN, we believe we can deliver a more engaging product and drive handle for our partner, and that's exactly what we have done.
We launched our Saratoga Live shows on FS2 in 2016 with about 80 hours of coverage. That figure has now grown to 190 hours of coverage. And over those four years, average daily off-track handle during the Saratoga meet has grown by more than $2 million a day. Handle for Saratoga across all ADW's has grown by 59 percent. And perhaps most telling of all is that if we look at NYRA Bets handle outside the state of New York during Saratoga, which I think is the metric that would be most impacted by the fact that our national TV coverage regularly highlights NYRA Bets, that average daily out-of-state handle has grown by more than 16 times over since 2016.
In my role at FOX I look at television ratings every day. It's a language that I have become very comfortable with. And yet in our relationship with NYRA I would tell you that the viewership statistics are far less important to me than the handle metrics that I just excited. I will always judge the success of this partnership by handle first. And I think that in that respect our approach is fundamentally different from the model of a Triple Crown or Breeders’ Cup telecast which still quite rightly follow the traditional television formula of aggregating a mass audience and converting that attention into advertising revenue. That is entirely appropriate for those properties which are exquisitely produced by our friends at NBC. But we're always going to view our broadcast first and last as an engine to drive growth in handle. And when you evaluate our shows, I encourage you to view us through that lens.
The impact that our FS2 presentations have had on NYRA's handle coupled with the fact that overall North American handle is on a four-year growth trend, strengthens my belief that notwithstanding the serious challenges we heard about earlier today, the future of racing as a television property is bright. I believe that horse racing can be an effective laboratory where we can try out new innovations that bring the fan closer to the event.
Horse racing has a long, impressive, and I would say underappreciated history of using new technology to enhance the fan experience and drive new sources of revenue from the photo finish to daily simulcasting to the development of powerful ADW platforms. And in our FOX broadcasts we seek to carry forward that long history of innovative thinking.
I also believe that we can integrate racing into our broader gaming strategy by looking for ways to marry horse racing to our FOX Bet initiatives. Because FOX Bet and our free-to-play app will be promoted regularly in the most powerful content on television, FOX Bet will be a widely recognized brand and a logical place for sports fans to play the races anywhere, any time.
And because FOX Sports 2 will have a greater volume of horse racing content than any other broadly distributed sports network, our racing programming will become a reliable platform for us to promote our FOX Bet offering to horse players. I really believe that we have only scratched the surface of what Fox Sports and FOX Bet can do in horse racing, and we are actively exploring opportunities to depend our involvement in this sport.
There will never be another now. It's true for our fans and it's true for our two businesses. It's because live sports programming has never been more valuable, because sports wagering will only become more commonplace and more accepted with each passing years, and because there's still room to elevate the daily presentation of top caliber racing in ways that can and will grow handle. These factors are coming together to present all of us a unique opportunity to re-imagine the future of horse racing and together we must not fail to take advantage.
Thank you for your time. Thanks for listening. I look forward to working with every one of you that's ready to work with us. And I'll see you at the races. Thanks.
Stuart S. Janney III: Thank you very much, Mike. You're a great partner for horse racing, and I think your enthusiasm for our sport is, first of all, very much appreciated and very evident.