Foxtel’s Stake In Ten Looking Doubtful Despite McLennan’s Departure

Foxtel’s Stake In Ten Looking Doubtful Despite McLennan’s Departure
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Foxtel’s attempt to purchase a 15 per cent share of the TEN Network is under threat despite TEN’s CEO, Hamish McLennan’s, sudden departure yesterday.

It is believed that Lachlan Murdoch’s part ownership in Ten (8.5 per cent), his standing at News Corp, Foxtel (News owns half) and Nova (radio stations) means the Foxtel-Ten deal will come under heavy scrutiny by the ACCC in terms of media ownership laws.

It is widely believed that McLennan was well encamped in the Murdoch clan and his removal yesterday – be it voluntary or otherwise – was one less impediment to Foxtel getting its hands on the struggling but improving broadcaster. Likewise, many believe that Foxtel’s injection of cash into TEN may possibly be the only thing that can reverse the network’s fortunes.

Speaking to Fairfax Media this morning, ACCC boss Rod Sims said: “We will take a holistic look to try and understand what influence News and or Foxtel could have over Channel Ten that would be a level of influence beyond the 15 per cent direct shareholding that Foxtel would have.”

(Graph shows TEN’s share price in red versus the ASX generally in blue. McLennan was appointed TEN CEO in March 2013.)

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The fear is that Foxtel (and basically News Corp) buying such a large chunk of TEN would mean less competition for sports rights – namely AFL and NRL – and for other locally produced content.

Like most people yesterday, McLennan’s departure came as a shock to veteran media commentator Steve Allen from Fusion Strategy. “I can’t see how his leaving TEN advances the Foxtel 15 per cent hurdle with the ACCC one iota,” he told B&T.

“Rod Sims has been very clear, his language has been very precise, we (the ACCC) will need to look at all parties and all shareholders of all parties. That means he’s looking at Lachlan Murdoch specifically.

“Lachlan owning part of TEN, Lachlan being executive and chairman of News Limited, etc, etc, etc… the way I read Sims’ comments is that Foxtel-TEN deal is going to have a very real problem getting up.

“And that’s going to be a real problem for TEN if it doesn’t happen. It won’t be dire stakes for them today or tomorrow but financially it’s going to a problem in the long run. I think they are running at a small profit month to month at the moment but it needs to improve.

“So it’s little wonder McLennan was replaced yesterday by a money man (David Gordon),” Allen said.

Sims will reportedly hand down his decision about the Foxtel and Ten deal on September 10. The deal has also caught the ire of TEN’s rivals and Sims has said to have met with them and listened to their concerns. Fairfax Media and Channel Nine are particularly concerned about the deal and where any potential sports rights may end up.

In 2012, the ACCC blocked Kerry Stokes’ attempt to buy-out James Packer’s ACP, a deal which would have landed the Seven boss a 50 per cent share of Fox Sports.

In June, Fairfax Media CEO, Greg Hywood, said: “News Corp and its family interests have woven together a mix of their publishing assets, their interests in Ten, Foxtel, Presto and radio … they have gamed the government. It’s supposed to be two out of three and it’s more like five out of five.”

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