JUST days into his new job, William Hill chief executive Ralph Topping faces a baptism of fire when he unveils figures expected to show the scars of the battle over a new horse-racing television channel.
Shares in William Hill and its rival Ladbrokes, which also reports next week, have been battered amid a significant worsening in City sentiment towards bookmakers.
"I can't see either of them reporting strong numbers and you struggle to see where
the good news is coming for them at the moment," said analyst Mark Reed of Landsbanki Securities.
A bitter wrangle over Turf TV, a horse-racing television service, new fears of a Government clampdown on betting machines and a backdrop of a consumer slowdown have conspired to knock more than £1bn off the combined value of the two companies in recent months.
The Turf TV deal, eventually struck after negotiations described as "war" by Topping's predecessor, is expected to significantly increase costs compared with the previous live television deal.
At one point William Hill and other bookies launched a legal action against Turf TV, alleging anti-competitive behaviour. The two companies, along with Coral, resisted signing up to the new service, but caved in when a significant proportion of races switched to Turf TV from January.
"I think Turf TV will be a disaster for them (William Hill and Ladbrokes]. It will see costs going up at a time when their revenues are already under pressure in their betting shop businesses," said Reed.
Last week another potentially serious blow was dealt when the Government launched an inquiry into whether gambling machines fuelled addiction.
Fixed-odds betting terminals have become an increasingly important source of revenue for bookies in recent years, with the 35,000 installed in betting shops each bringing in an estimated £500 a week.
Although William Hill and Ladbrokes have already lost a third of their market values in recent months, Lehman Brothers analyst Julian Easthope warned that "if the Government was serious about doing something about these machines then the market has not fully priced that into their shares."
Although there has been bid speculation around both companies, it is now thought unlikely there will be any firm interest until more details emerge about the potential impact of the Gambling Commission inquiry.
A slowdown in consumer spending would also limit any growth prospects. "Betting shop customers are fairly resilient but the internet customer base hasn't been tested in a downturn," said Reed.
Topping, 56, has worked full-time for William Hill for almost 35 years and was group director of operations before becoming chief executive last week.
The father of three, who lives in the Trossachs, took a Saturday job at a betting shop near Hampden, Glasgow, in the early 1970s. He studied English and law at Strathclyde University but left without a degree and became a shop manager for William Hill in Renfield Street.
He was later appointed regional manager for Scotland, retail operations director and internet director, and joined the board last April. He was something of a surprise appointment after a host of senior industry figures from outside the company had been linked to the post.
Chairman Charles Scott said Topping's "in-depth knowledge of both the industry and the company far outweighed his lack of experience of being a chief executive".
The full article contains 561 words and appears in Scotland On Sunday newspaper.
