Churchill Downs Inc. CEO Bill Carstanjen said the impact of the company’s purchase of Big Fish games, a producer and distributor of mobile and online games, won’t be felt until the end of 2015, but so far things are going swimmingly.
“Big Fish was a very large transaction for us. We did a tremendous amount of work before we did it. So I’m happy to say that we haven’t really been surprised by anything, “Carstanjen said during a conference call with investors. ”We knew the team very well, we knew the business very well when we decided to do the deal. So largely, everything has been performing as we hoped that it would.”
The acquisition included an upfront purchase price of $485 million in cash and stock, according to a news release. An additional payment of as much as $350 million may be paid in cash, based on 2015 earnings growth.
Carstanjen said the company bough Big Fish Games because it does not make “giant bets on individual games” but rather uses a “low-cost development network” of U.S. resources and development shops to produce a content portfolio.
“This is not a business that ever gets in too deep or bets too much on any individual game,” he said.
He said Churchill Downs officials want to soft-launch the games and see what the initial results are before they go into any details.
“We’re going to prove it before we get into too much expectation-setting with the public,” Carstanjen said.
Carstanjen also said that racing revenue outside of the Kentucky Derby and Kentucky Oaks continues to decline. He said the company’s focus now is on its cost structure and managing racing operations in an efficient manner.
According to a review of Churchill Downs Inc.’s year-end earnings report by bizjournals.com, fourth quarter racing revenue was down 21 percent from a year earlier, to $30.4 million. For the year, the company recorded a 5 percent reduction in racing revenues, finishing at $261.5 million.
Churchill Downs reported that net income for 2014 fell 16 percent from 2013, to $46.4 million, or $2.64 per share, diluted. Revenue for the year rose 4 percent, to $812.9 million.
For the fourth quarter, the company reported a net loss of $13.8 million, or 81 cents a share. That compares with a loss of $5.7 million, or 33 cents a share, a year earlier. Revenue for the quarter rose 4 percent, to $168.3 million.
