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CBS’s Ten takeover welcomed in Oz

Ten: now owned by CBS

Australia’s government and screen producers have responded enthusiastically to CBS Corp’s binding agreement to buy the struggling Network Ten.

While the deal is subject to Foreign Investment Review Board (FIRB) approval, CBS has agreed to stump up about A$140m ($111m) to repay the secured creditors.

Of that, around A$100m would go to Commonwealth Bank Australia, which had provided a A$200m credit facility, and several other banks.

The balance would go to billionaire shareholders Bruce Gordon and Lachlan Murdoch, who provided additional funds after the broadcaster was placed in voluntary administration in June.

In addition, CBS, which has also confirmed it will launch streaming service CBS All Access in Oz but failed to give a date, has agreed to repay some of the unsecured creditors. These include 21st Century Fox and local production companies and suppliers, while CBS will also guarantee employee entitlements.

By some estimates, the US studio will pay up to A$250m for Ten, sister channels Eleven and One, and digital platform tenplay. CBS already owns 33% of Eleven.

That would mean Ten’s shareholders would get nothing. When trading in Ten’s stock was suspended in June, shares were worth A$0.16, valuing the company at A$59.1m.

Administrator KordaMentha is expected to apply to the Federal Court on Wednesday for approval for CBS to put up the initial A$140m. The full financial terms of the deal will be revealed in a letter to creditors as soon as this Thursday, which would be followed by a creditors’ meeting on September 8.

Pending the nod from the FIRB, court approval will then be needed to transfer the shares of parent Ten Network Holdings to CBS. That process could mean the US studio takes control by the end of September.

CBS has guaranteed there will be no redundancies, so the existing management team headed by CEO Paul Anderson is likely to remain in place.

The administrators accepted the offer from CBS over a rival bid from Murdoch and Gordon, who collectively owned about 22% of the company. CBS, the biggest single creditor, had lodged a claim for A$843m (US$678m) owed by Ten.

After the CBS announcement, Australia communications minister Mitch Fifield said: “I welcome any proposition that would see Ten stable, secure, broadcasting and employing journalists.” He added that he did not meet with CBS executives during their recent visit to Oz.

Matthew Deaner, Screen Producers Australia (SPA) CEO, said: “This reported deal demonstrates that despite significant pressures, our market remains robust and competitive. It is a meaningful display of confidence in the Australian industry.

“Having a strong third commercial free-to-air network is important for competition, important for Australian audiences that benefit from Australian and children’s content obligations, and important for Australian production companies that supply the market.”

SPA has been urging the federal government, which is reviewing Australian content regulations including children’s drama, to extend local content obligations on streaming services such as Netflix and Stan.

Deaner added: “This news also comes at an important time for our industry. In the context of the Australian and children’s content review, it highlights the importance of content obligations in safeguarding our market from dumping of content from other English-speaking jurisdictions.

“The news that CBS intends to bring with it a new streaming service shows that these content obligations need to be evolved to reflect new market realities.”

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