Fate of Ten in hands of billionaires
SYDNEY: Ten Network’s survival depends on three billionaire debt guarantors, including News Corp co-chairman Lachlan Murdoch, after Australia’s third-largest TV network reported a A$232 million (US$173 million) half-year loss in a weak advertising market.
Ten said yesterday that it needed to secure an amended or new borrowing facility to ensure it could continue operating after a long period of upheaval that couldn’t restore the fortunes of the once hugely popular youth-oriented network.
All three of Australia’s free-to-air television networks are under pressure as consumers increasingly view content online through streaming services like Netflix Inc and Amazon.com Inc’s Amazon Prime. But with a small market share and modest advertising revenue, Ten is in the weakest position.
“As a result of the matters disclosed, there is a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern,” Ten said in its financial accounts.
The network has a A$200 million debt facility guaranteed by Murdoch, businessman Bruce Gordon and Crown Resorts casino magnate James Packer, due to expire in December.
“There may be some reluctance for the guarantors to re-sign,” said Steve Allen, the managing director of media strategy firm Fusion Strategy. “The free to air television market is under extreme pressure right now.”
Representatives for Murdoch, Packer and Gordon did not respond immediately to requests for comment.
The trio of businessmen, along with Australian mining billionaire Gina Rinehart, have held prominent stakes, board seats and roles in the company for the past several years with a plan to fix the network.
This has included bids to recapture its dominance over younger viewers once enticed by the reality television trend of the 1990s and early 2000s.
“There’s no easy way out,” said media analyst Peter Cox. “It simply lost its identity.”
Allen of Fusion Strategy said Ten were going back to their two principal overseas program partners, FOX and CBS, to renegotiate those contracts and make some savings. A Ten spokesman did not respond immediately to a request for comment about any contract renegotiations with the two.
The bulk of Ten’s half-year loss was attributable to a A$214.5 million noncash impairment on the value of its television licence.
Ten said it expected to report an underlying loss before interest, tax, depreciation and amortisation of A$25 million to A$30 million for the financial year ended Sept 30, absent any relief in television licence fees.
Ten chief executive Paul Anderson in February called on the government to reduce licence fees and reform media laws.