(NOTE: B&T has updated this story). Embattled broadcaster the Ten Network has gone into voluntary administration following yesterday’s news that shareholders would not guarantee a $250 million credit lifeline.
In a one-sentence statement to media morning, the company announced: “Ten Network Holdings Limited (ASX: TEN) (“TEN” or “the Company”) announces that Mr Mark Korda, Ms Jennifer Nettleton and Mr Jarrod Villani of Korda Mentha have been appointed as voluntary administrators of the Company and each of its subsidiaries listed in the attached schedule (together the “Ten Group”) by the Ten Group Directors.”
However, many are speculating that far from the end for Ten, being forced into the hands of receivers may be just the tonic the broadcaster needs.
For starters, the appointment of administrators would give the broadcaster a chance to get itself out of onerous contracts with US networks CBS and 20th Century Fox. This, in turn, would make the business far more attractive to shareholders or potential buyers.
Ten reportedly pays $150 million a year to the two US giants for rights to shows such as Madam Secretary, NCIS and Homeland. None of which could be called great ratings draw cards for the beleaguered network. Nor are they doing much from stopping viewers switching to Netflix which boasts far superior programming.
Without the shackles of the deal, plus talk the federal government may soon scrap TV license fees (Ten pays about $50 million annually), the broadcaster would suddenly become far more appealing to private equity firms or cashed-up investors.
The Australian has this morning reported: “Speculation is rife that a private equity firm is circling Ten and could join forces with the shareholders in a privatisation of the network.”
Ten’s shares collectively are worth about $60 million, which is believed to be cheap for a television licence in Australia.
Following yesterdays news of the trading halt, there had been media reports that two Aussie billionaires – miner Gina Rinehart and Hungry Jack’s supremo Jack Cowin – were possibly hatching plans for a buy-out. Rinehart already has a 8.2 per cent share in the network.
While Fairfax Media has suggested that,”Logically, one could speculate that the most likely outcome is that (Bruce)Gordon/ (James) Packer and (Lachlan) Murdoch will convert their debt to equity and become the outright owners of Ten.” However, its unclear how this deal, if it were to even go ahead, would contravene existing media ownership laws.
Meanwhile, News Corp has made no secret of its desire to acquire Ten. News Corp owns 50 per cent of Foxtel which has a 14 per cent stake in Ten. Lachlan Murdoch’s private equity firm Illyria has a 7.7 per cent share.
In the ASX documents that put the broadcasters shares in a trading halt yesterday, Illyria was named as one of the two shareholders (the other being Bruce Gordon’s Birketu) who refused to guarantee Ten’s $250 million funding lifeline.
James Packer also owns a 7.7 per cent of Ten, but he reportedly wants to sell-up and get out of the media game altogether.
It has been reported that News Corp bosses want to get their hands on Ten and replace its bulletins and newsrooms with its own Sky News broadcasts. This would dramatically reduce costs, give Ten access to Sky’s big name presenters while making Ten’s highly paid presenters redundant.