Ten at mercy of big three shareholders
Townsville TEN Network’s fate lies in the hands of billionaire shareholders Bruce Gordon, Lachlan Murdoch and James Packer for the second time in four years.
The loss- making commercial television broadcaster is looking to secure support for a new financing package from its major investors, who collectively own about 30 per cent of the company. Ten yesterday posted a first- half loss of $ 232.2 million after booking a $ 214.5 million writedown to the value of its TV licence and suffering a 2.5 per cent fall in revenue.
Faced with a bleak trading outlook given the grim TV advertising market, Ten is seeking to secure a $ 250 million borrowing facility before its existing $ 200 million loan expires on December 23. The three businessmen are already guarantors of the $ 200 million package, struck in 2013, and without their support for a new facility, Ten says there is a “material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern”.
“The facility is required as a result of expected future trading performance and volatility within the free- toair television advertising market,” Ten said yesterday.
Australia’s third- ranked commercial TV broadcaster – which employs about 1000 people – must now demonstrate how it can improve future earnings.
Australian mining magnate Gina Rinehart and pay TV group Foxtel are also major stakeholders.
Ten has identified cost and rev- enue initiatives including renegotiation of programming contracts and a hoped- for reduction in Federal Government TV licence fees as potential avenues to improve its outlook.
Investors are unclear about the major shareholders’ commitment, said one analyst, speaking on condition of anonymity.
“I think the whole company is in the hands of the lenders now, and obviously nobody knows what they’re thinking and what the guarantors are thinking,” the analyst said.
The analyst said the spotlight is on Mr Packer, who has recently retreated from international gaming markets through his shareholding in Crown Resorts and scaled back other exposures, such as selling his stake in US film company RatPac Entertainment, to focus on his Australian gam- ing operations, the analyst said. “He’s a real wildcard because he seems to be in a real cashing- out mode, and sweating his assets.”
Ten, like rivals Nine and Seven, has been lobbying ahead of the May 9 federal budget for a cut to its TV licence fee. Ten’s half- year loss came as costs jumped due to investment in local shows such as The Biggest Loser, Australian Survivor and I’m a Celebrity ... Get Me Out Of Here!
While the move has grown revenue and market share, plus a swag of Logies at this year’s TV industry awards, costs have outweighed earnings.
The network also warned that it expects to book an annual underlying earnings loss of between $ 25 million and $ 30 million if the TV licence fee isn’t cut.