Sale gives clear air
Townsville THE sale of Ten Network to the giant US CBS Network needs two levels of approvals – from Ten creditors and the Treasurer. But both are effectively in the bag. There’s no way Scott Morrison is going to kick Ten back into uncertainty, administration and receivership.
And CBS is Ten’s biggest creditor and has the most votes, so it will effectively vote to sell Ten to itself.
It bought that privilege by tipping in $ 130 million to pay out the major secured creditor, the CBA, which was owed around $ 90 million, plus Lachlan Murdoch, Bruce Gordon and James Packer, who had guaranteed the CBA would get repaid.
This will effectively remove all of them from voting at the Ten creditors meeting to approve the sale to CBS – leaving CBS as the controlling voter. Shareholders don’t get a vote and have lost their money completely and cold.
The CBS bid came out of left field on two levels.
First, the US network and program supplier to Ten had been working with two US private equity operators, Oaktree and Anchorage, to bid for Ten.
Out of nowhere, it ditched them and launched on its own.
But secondly, the first that the competing bidder – the partnership of Murdoch and Gordon – heard about it was as a done deal.
And further, they weren’t told the precise detail: they and everyone else will be told later in the week when CBS moves to pay them and the CBA out.
The appeal of CBS was that it offered a clean and all- but- done deal. In contrast, Murdoch and Gordon had to get over the problems caused by the media rules.
And every other bidder would have had to get over the problem that at the necessary creditors’ meeting CBS would have had the most votes as the biggest creditor.
It is understood Murdoch and Gordon made two separate bids to deal precisely with the issue of the media rules.
One was on the basis the rules were changed to allow them to own Ten with a normal structure.
The other would have used nonvoting or quasi equity to keep their voting control below 15 per cent, in accordance with current rules.
This was the structure the late Canadian media proprietor Izzy Asper used to buy Ten, in similar circumstances, in the early 1990s.
Both of the Murdoch- Gordon proposals would have kept Ten listed and given existing shareholders an ongoing stake, albeit a token stake, as any real equity value in Ten has been wiped out. In the first instance, noth- ing much will change with Ten for viewers. CBS is the major foreign content supplier and as part of the settlement Ten ( and CBS) would work out continuing arrangements with other suppliers.
In the long run everything is up for change. For starters, CBS was making noises yesterday about bringing its Netflix- competing programming offer Down Under.
And the fact Murdoch missed out on Ten could make the Senate crossbenchers more inclined to allow changes to the media rules to go through.
They might have made sense in 1987, but they are out of touch with all reality in 2017.