Into the Shark Tank
Townsville THE Ten Network is about to formally go on the market.
Later this week or early next week, the administrator, KordaMentha, is expected to call for expressions of interest ( EOI) to buy the network.
But there won’t be an early sale, far less a “fire sale”. For starters, all the obvious buyers are specifically prohibited from buying it unless and until the media reforms are passed through the Senate and into law.
That applies especially to the two shareholders who a week ago triggered the Ten implosion – Lachlan Murdoch’s Illyria ( under the current so- called “two out of three” rule) and Bruce Gordon’s Birketu ( under the “75 per cent reach” rule).
But it really is an open question whether anyone would be prepared to buy the network in its present condition in the context of too many freeto- air TV stations chasing too few revenue dollars in a broader world of chaotic media “disruption”.
They certainly wouldn’t buy it with the debt owed to the Commonwealth Bank included. At the end- February balance date that was only $ 30 million or so net, but an expectation that it was about to blow out dramatically to $ 175 million by the end of July triggered the duo’s move.
That points to a further complication: there’s no certainty that KordaMentha will remain in control of the Ten process. There’s always the possibility that a receiver could be appointed over the top of the administrator, and not necessarily to all the companies in the network.
The administrator is usually ( and was) appointed by the directors to basically take control of the company and to manage its business, to save the directors from trading when it might have been or was going to become insolvent.
As they noted in their statement announcing the move, KordaMentha was going to take an operational and financial assessment of the business. It intended to continue as “much as possible on a business as usual basis”.
In contrast, a receiver is appointed by a secured creditor – in Ten’s case that would be the CBA – to very specifically sell sufficient assets to repay the debt. In practical terms the only asset available to be sold is the network itself.
So the first and indeed only issue for either KordaMentha or any receiver appointed by the CBA would be to find a buyer – and, as anyone who’s put a house to auction knows only too well, preferably, buyers.
Calling for EOI really only starts the process.
What will really decide the network’s future is the complex game of poker among a host of interests.
None of these particularly wants to own and operate a free- to- air TV Network in isolation, but as part of a broader strategic play.
Its key, if not its biggest asset, is its ( one of three) privileged access to the prime sports programming on the anti- siphoning list ( both before and after the so- called media reforms).
Apart from that – and that Ten’s eyeball- linked revenue is more secure – this situation with Ten is very similar to that at the Fairfax print media group.
We have two stated bidders for the Fairfax company; in contrast to the Ten situation, prepared to pay serious money ( nearly $ 3 billion).
But neither is a conventional – or indeed, even an unconventional or 21st century – media company; they are both Wall St financial mainchancers. Their interest is not in running or even revitalising the media side of the Fairfax business, but only in its Domain, primarily online, property advertising.
The key, very simple, point is that no one is prepared ( or indeed these days, arguably, even able) to use the revenue dollars from Domain to cross- subsidise the media operation – the model that has underwritten traditional media since the end of the 19th century.
Indeed, as one astute observer put it to me this week, it remains entirely possible that neither ends up buying Fairfax. Resolving the print side is just too complicated ( and potentially) expensive – and do you really need to buy Domain?
Indeed, as its major ( and bigger) competitor REA ( part of News Corp, publisher of this paper) – to say nothing of Seek and CarSales – showed, you can build this franchise largely unlinked to a legacy print business. And that was when print was still dominant.
All this really makes more urgent the need to pass the media reforms – especially as they are still woefully inadequate to the dynamic change in and around media.
Yes, in the short run that might be to give Ten a survivable future, but it’s really about a viable future for media in total.