Tabcorp subcontracts future to opportunists

Tabcorp is a company whose board and management has seemingly lost all sense of strategic direction and has essentially ‘sub-contracted out’ its future to others.

Tabcorp CEO David Attenborough. Picture: Britta Campion/The Australian

Tabcorp has inched agonisingly closer towards the inevitable sale or separation of its wagering and media business – at no thanks to its board of directors except from the board’s numbing inaction.

That points to the core problem: we have a company whose board and management has seemingly lost all sense of strategic direction and dynamism and even more so of its urgency.

So Tabcorp’s operating business and investment futures have been essentially ‘sub-contracted out’ to the decision-making, timing and profit-seeking – for themselves, not for Tabcorp shareholders – of any opportunistic players in the gambling, private equity and investment banking spaces.

This is captured by two things.

First, the announcements from Tabcorp this year. With four months of the year gone, there have been only seven – the interim profit report in mid-February, four pro-forma statements around the dividend and so on, and so only three actually substantive announcements.

In early February, it announced it had received a “number” of proposals on the wagering business. Nearly two months later at the end of March it announced its “strategic review” of its “structural and ownership options”. And finally we got Tuesday’s statement of a higher bid from Entain.

Self-evidently, none of this has been driven by Tabcorp itself. None of this was even on, far less a product of, its considered strategic agenda.

The detailed interim profit presentation made no reference to any strategic review; the actual profit statement made only a passing reference to the necessary assessment of the external proposals.

In short, Tabcorp has been a purely passive recipient of the ambitions of others. Running into all this, the mindset of both board and management was clearly that of just business as usual.

At the annual meeting in October the message was all about the strategic success of the 2017 merger of Tabcorp and Tatts. Now, suddenly, it’s switched 180 degrees to essentially undoing that merger.

Tabcorp CEO David Attenborough. Picture: Britta Campion/The Australian

That points to the second thing. Job done, late last year it was announced that long-serving CEO David Attenborough would retire in the first half of 2021.

Yes, that was to provide space after the departure of chairman Paula Dwyer, but it did add to the sense of a rather leisurely approach to the strategic challenges – and indeed opportunities – facing Tabcorp.

Indeed the board knew – or should have known – back then, that exactly what has developed was already developing, but it seemed to think its CEO could embark on a leisurely “long goodbye”.

Now, that goodbye has been deferred – again, a decision only taken rather belatedly at the end of March.

On the basic level, all this has been appropriate. The board has to consider the offers, even if they weren’t on its radar.

Moving to a strategic review that it didn’t intend to have, again, made comparative sense.

And obviously, you couldn’t hire a new CEO into this uncertainty; so the current CEO staying on is obvious, if equally unsatisfactory.

But that does not hide the fact that it’s all been imposed on Tabcorp from the opportunism of outsiders; and it exposes Tabcorp’s failure to drive its own strategic development.

Yes, Tabcorp has been absorbed by the Tatts merger and the synergies that it had to and has extracted.

But the very reality of the merger – two businesses that operate on government licences – both announces and seems to have dictated a rather fundamental strategic sterility and inertia at board and management levels.

Contrast a Tabcorp waiting, quite patiently, for others to tell it what its future is with, say, PointsBet.

No, I’m not talking about those Shaq ads, but PointsBet seeking out and forging a deal that makes it the official sports betting partner of NBC, one of the four FTA-TV networks in the US.

While Tabcorp waits to be dismembered.

Originally published as Tabcorp subcontracts future to opportunists