You’d think Network Ten’s Pyrmont HQ was built on an Indian graveyard judging by the bad luck the broadcaster has had in recent times, culminating in it going into receivership yesterday.
Following yesterday’s news of the arrival of investment firm KordaMentha to run the joint, many analysts predict Ten’s shares (valued at 16 cents) are now worthless leaving its billionaire shareholders Jamie Packer, Lachlan Murdoch, Bruce Gordon and Gina Rinehart a collective $1 billion out of pocket.
When most of the quartet were buying into the network, circa 2010, Ten’s shares were hovering around the $3-mark.
(As an aside, Seven’s shares rose three per cent yesterday and Nine’s five per cent).
Packer, who owns 7.7 per cent of the beleaguered network, had reportedly been trying to flog his shares for some time but found no takers. And it would appear James has all but done with Australian media for the time being.
Rinehart has apparently given up on her $172 million investment and walked away.
The four billionaires guaranteed Ten’s $200 million funding from the Commonwealth Bank. Sure, if Ten defaulted they’d have got stuck with the bill, however, they would have owned all of Ten’s assets.
On Tuesday, Murdoch and Gordon refused to guarantee the loan past December and yesterday the receivers were called in.
But it appears the duo have an ulterior motive and have hatched a plan to take the broadcaster private and give them ultimate control.
The fact that the company is in receivership means it can extricate itself from expensive content sharing deals with US networks CBS and 20th Century Fox reported to cost Ten $150 million a year.
Yesterday, in a change of substantial holding notice to the ASX, Gordon’s investment vehicle Birketu, which holds 15 per cent of Ten, announced a tie-up with Murdoch’s 7.5 per cent stake held in his private investment company Illyria.
The deal was reportedly hatched last Friday, before Tuesday’s announcement that Ten’s funding would no longer be guaranteed.
The association would give the two a 22.5 per cent stake in Ten and as it’s not a merged entity then it doesn’t trigger the compulsory acquisition provisions in corporation law which come into effect once the 19.9 per cent threshold is breached.
Acting as an association also means there is no breach of the existing two-out-three cross media ownership laws.
However, in the letter of agreement to the ASX it made it clear that it does not constitute a move to take control of Ten and merely commits them to “negotiate and facilitate” a restructure.
The agreement between the two will come to nought if the media ownership laws aren’t changed and the administrators see no hope in Ten’s future and its wound-up and assets sold off.
Ten’s directors have said administrators Korda Mentha are working on plan to either sell or recapitalise the business. Bosses have also said it would be business as usual for the network as the administrators got to work. There’s a lot more to come.
