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Ten Oz calls in administrators

The parent company of Australia’s Network Ten today called in voluntary administrators to examine the potential sale or recapitalisation of the business.

Ten: facing uncertain future

The move by the board of Ten Network Holdings follows confirmation yesterday that billionaire shareholders Lachlan Murdoch and Bruce Gordon will not extend or increase their support for a A$200m (US$151.1m) cash-advance facility from the Commonwealth Bank.

That credit line expires on December 23 and Ten had been trying to arrange a new or amended borrowing facility of A$250m. Yesterday the company asked for a two-day trading halt in its shares, which were worth A$0.16, valuing the company at A$59.1m.

Administrators KordaMentha will work closely with management, employees, suppliers and content partners as they undertake a financial and operational assessment of the business, the company said.

During this period the administrators intend to continue operations as much as possible on a business as usual basis.

By July 20, KordaMentha is expected to propose either returning control of the broadcaster to the board of directors, selling the company, or giving creditors control.

The board was forced to act despite the Ten group reaching an in-principle agreement with 21st Century Fox and CBS on the vast majority of commercial terms for new content deals.

Although final terms have not been agreed the company said these deals would reduce the cost of US programming by about 50% while still giving Ten access to the ‘best’ productions of those studios over the medium term.

Together with other cost savings and the $A22m reduction of license fees paid to the federal government the company expects a A$50m improvement in earnings in fiscal 2018 and more than A$80m the following year.

In a statement the directors said they “regret very much that these circumstances have come to pass” and they thanked the leadership team which had achieved everything the board asked them to do over the past few years in very challenging circumstances.

The board also thanked employees and contractors for their commitment and enthusiasm for Ten’s programmes and business.

CEO Paul Anderson has ruled out any immediate redundancies and quashed speculation that Foxtel’s Sky News would replace its news bulletins.

Mitch Fifield

Murdoch and Gordon, who owns the WIN network, and Foxtel, which owns just under 14% of Ten, are not allowed to increase their stakes under cross-media rules that the government is attempting to reform.

Communications minister Mitch Fifield described Ten’s move as a wake-up call to opponents of media reform, referring to the Labor party and the Greens which are blocking the legislation in the senate.

“This is a difficult and stressful time for Ten’s staff and their families who are facing an uncertain future. That a major Australian media organisation is in such difficulty should be a matter of concern,” Fifield said.

“The government’s reforms are vital measures that will unshackle Australia’s media industry from redundant laws and allow it to respond to increasing international competition.

“The reforms support Australian jobs, will strengthen local content obligations, and bring our media laws into the digital age.”

In a late development, Gordon and Murdoch have agreed to pool their stakes in Ten, a ploy that some analysts said could enable the pair to take the business out of administration and into private hands.

Gordon’s investment vehicle Birketu is the largest shareholder, with 15%, while Murdoch holds 7.5% through his Illyria company.

Their combined 22.5% stake is above the 19.9% threshold at which a takeover bid must be launched, but there is no indication yet of their intentions beyond a statement from Birketu which said the two parties may consider whether a proposal could be formulated to repay Ten’s existing secured debt and to remove any guarantee support.

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