Network goes cap in hand to backers

TEN Network shares have plunged amid revelations the struggling broadcaster needs its trio of key backers to guarantee a new $250 million loan if it is to survive.

Its shares fell almost 20 per cent yesterday, cutting its market value by more than $30 million to $132 million.

Ten posted a net loss of $232.2 million for the six months to February, compared with a slender $13.4 million profit for the same period a year earlier.

The network behind shows such as The Project and MasterChef revealed it was writing $214.5 million off the value of its television licence, dramatically intensifying its losses for the half.

In a director’s report, the group confirmed its future was uncertain without a new loan.

“There is a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern,” the report said.

The broadcaster’s key backers — James Packer, Lachlan Murdoch and Bruce Gordon — already guarantee a $200 million line of credit due to expire on December 23.

Each is then entitled to a $31 million guarantor fee.

The board says it needs the new debt finance to meet its repayment obligations under the existing facility, including interest payments, shareholder guarantor fees and other debts.

But Ten directors say the key backers are demanding signs of improvement.

“[Ten] understands from discussions with shareholder guarantors that it needs to demonstrate the potential for improved future earnings in order for a new facility to be guaranteed,” the report said.

Ten’s half-year loss came as costs jumped due to investment in local shows.

While the move has grown revenue and market share, plus a swag of Logies, costs have outweighed earnings.