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November 21, 2018

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Satre announces he’ll step down as Harrah’s chief executive

Harrah's Entertainment Inc. Chairman and Chief Executive Officer Phil Satre will relinquish his CEO post to Harrah's President and Chief Operating Officer Gary Loveman, effective Jan. 1, the Las Vegas-based casino empire announced Wednesday.

Satre, 53, will remain chairman of the board for at least two years under a contract with the company -- the third-largest in the industry -- and will chair the board's executive committee.

"Many goals I have set during my tenure have been achieved," Satre said on a conference call with analysts today. "I believe now is the optimal time for a change in leadership."

"I want someone who is able to take what the company has accomplished over the last five to 10 years ... and move this company to the next level."

Satre did not detail his future plans on the conference call, and it is not clear whether he intends to pursue another industry position or leave the day-to-day casino business altogether.

The executive is best known in Las Vegas for moving the headquarters of the company from Memphis, Tenn., to Las Vegas and for buying the Rio hotel-casino off the Las Vegas Strip. The company has made less successful investments in National Airlines and in its Harrah's New Orleans Casino, a property formerly in bankruptcy and that became fully owned by Harrah's this year after the company wrested control from a group of majority investors.

Aside from the Rio, which is now generating positive cash flow as the company's second of two Las Vegas casinos, Harrah's under Satre is noted for its successful takeovers of the Showboat, Players and Harvey's casino chains.

Harrah's slot club loyalty program, Total Rewards, also was initiated under Satre and is considered a model by which other casino giants have begun their own slot card clubs -- programs that customers use across multiple properties to rack up freebies.

Harrah's became known for another industry first this year when it unveiled public service TV ads about gambling responsibly. The company, which is known for its responsible gambling programs for employees and customers, prominently featured Satre as its spokesman in one of the ads.

Loveman, a former Harvard University professor in business administration, joined the company in 1998. He is considered a marketing whiz and is credited with developing the company's Total Rewards program and other marketing initiatives that have yielded strong sales and revenue growth for the company.

He gained attention locally when he publicly criticized Nevada gambling regulators for their "invasiveness" in handling his licensing process as a key casino executive.

Loveman became annoyed with the process last year when Nevada regulators took three years of personal correspondence from his office. The extreme level of regulation in the casino industry appears unnecessary given that companies are publicly traded and engage in an accepted form of consumer entertainment, he argued at the time.

Wall Street analysts said the transition was expected and won't change the company's outlook.

Steven Kent, a casino industry analyst with Goldman Sachs, said the transition will have "little impact" on the company's shares.

"This came as expected, though a little earlier than originally thought," he said. "Gary Loveman has been very involved with many of the strategic decisions that Harrah's has made recently, and we don't expect them to change their strategy dramatically."

Merrill Lynch casino industry analyst David Anders today reiterated a "strong buy" rating on Harrah's stock and called the transition "a natural part of Harrah's evolution."

"Under Satre, the company grew into a portfolio of 26 casinos while over the last four years the focus has increasingly shifted from new unit growth to improving returns on existing assets," Anders wrote in a research note.

"Loveman has been and remains critical to this shift and with today's announced management changes, the Board (as we do) clearly believes that this remains a very viable and profitable growth strategy."

Timothy Wilmott, 44, will assume Loveman's post. Wilmott has been Eastern Division president of Harrah's since 1997 and a Harrah's executive since 1987.

Loveman said his focus will remain consistent with the company's strategy of increasing same-store sales growth, expanding geographically and making acquisitions.

"There really hasn't been a bad hour of the four years we've worked together," Loveman said. "It truly has been a pleasure."

Examples of that strategy include the Harrah's Rincon Casino & Resort, a casino launched in California last month that Harrah's is managing for an Indian tribe. Also last month, the company announced its intention to acquire a controlling interest in the Louisiana Downs racetrack, where it aims to install slot machines and make renovations.

"This is the kind of thing we're going to be looking at," Loveman said. "We are optimistic that new jurisdictions will open to gaming."

Business opportunities may include opening slot machines at racetracks, operating casinos for Indian tribes and launching riverboat casinos, he said.

Satre joined Harrah's in 1980 as vice president, general counsel and secretary. He was named CEO in 1994 and in 1997 was elected board chairman.

He has overseen the company's expansion from four to 26 casinos, making the company the most geographically diverse in the industry.

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