Murdoch, Gordon opt out of Ten challenge
TELEVISION: Media tycoons Lachlan Murdoch and Bruce Gordon yesterday appeared to pass on the opportunity to challenge the sale of the Ten Network to US free-to-air network CBS.
A 4pm court-sanctioned deadline for any challenge to the transfer to CBS came and went yesterday, with no appearance by Mr Murdoch or Mr Gordon to oppose the transfer of Ten to CBS.
It had been suggested that Ten’s administrators, Korda-Mentha, could face a fresh challenge from Mr Murdoch’s private company, Illyria, and Mr Gordon’s company, Birketu.
However, Mr Murdoch’s corporate adviser, Ben Keeble of Fort Street Advisers, late yesterday referenced a KPMG independent expert’s report, which found that even on a bestcase scenario, Ten was worth a total of $130 million, and could well be worthless.
Mr Keeble contrasted the KPMG expert valuation with the $250m that Illyria and Birketu were asked to provide earlier this year as a guarantee to keep the company afloat until 2020.
He hinted that the low valuation in the expert’s report justified the decision by Mr Murdoch and Mr Gordon not to extend and increase its guarantee on Ten.
“If you look at the KPMG report, and the conclusion that even in the most optimistic case Ten has an enterprise value of approximately $130m, it is very clear why the shareholder guarantors reached the conclusion that they were not prepared to increase the guarantees to $250m, or extend to 2020,” Mr Keeble said.
By declining to file an appearance in court yesterday, it is believed that Mr Murdoch has decided to effectively walk away from any prospective challenge to the CBS deal, subject to its final clearance by the Foreign Investment Review Board.
Earlier this year, Mr Gordon and Mr Murdoch — who is also the co-chairman of News Corp, publisher of The Weekend Australian — were each asked to almost double their respective guarantee exposures to Ten via a Commonwealth Bank loan, from $66.7m each previously to a new figure of $125m each.
This week’s KPMG expert’s report indicated uncertainty as to whether Ten would ever be in a position to repay the CBA facility. In this scenario, Illyria and Birketu would have been liable to repay any shortfall.
On Monday, there will now be a directions hearing on the proposed compulsory share acquisition by CBS. At this hearing, it will quickly become clear if any other shareholders of Ten intend to challenge the share transfer to CBS.