$200m punt on Ten fightback Broadcasting TV network reports $285m loss
Key shareholders James Packer and media moguls Lachlan Murdoch and Bruce Gordon will provide the backing for the facility, while resource magnate Gina Rinehart - also a major shareholder - did not participate in the guarantee.
Even so, Ten said Mrs Rinehart had supported the network entering into the lending facility provided by Commonwealth Bank.
The move came as the free-to-air broadcaster on Thursday reported a full-year loss of $285 million, compared with last year's $12.8 million loss.
Ten was tight-lipped on details, including costs to guarantors and whether Mrs Rinehart was asked to act as one. But it stressed that the agreed terms were more attractive than other options.
The proposed facility will be put to a shareholder vote at the company's annual meeting in December.
Ten, Australia's third-ranked commercial network, has fallen out of favour with shareholders in recent years, due to a string of capital raisings and executive turnover while it has struggled to win back the "halo effect" that comes with broadcast rights to major sports.
Brokerage Citigroup said this week that Ten's turnaround was "taking longer than expected, with the programming content failing to jump-start audience ratings" in the second half of 2013.
But new chief executive Hamish McLennan said there was "undeniably more confidence" in the advertising market since the federal election and he would welcome the sharemarket listing of rival free-to-air broadcaster Nine. Tipping only modest growth in the ad market in the near term, Mr McLennan expressed confidence that ratings would improve, on the back of the T20 Big Bash League over summer, the Sochi Winter Olympics and a focus on the "lucrative" 25-to-54 "young at heart" market.
"We hope and expect to do better," he said. There was also market appetite for a strong challenger to channels Seven and Nine, he added.
It's a theme matched by Citigroup, which has argued that the TV advertising market backdrop would improve in 2014 and "Ten audience ratings should benefit from new sports content and returning programs."
Mr McLennan faces a series of challenges revitalising the network. Multichannel broadcasting is running up costs, while major sporting codes have been locked away on long-term deals with rival networks. The advertising market remains under pressure while viewers are increasingly being lost to online. Ten had 19.9 per cent of the metropolitan ad market in September.
The result for the year to August was dragged down by $336 million in one-off charges, including restructuring costs and a $292 million write-down on the value of its TV licence. Revenue for the year fell 22 per cent. The underlying loss, which stripped out restructuring charges, came in at $5 million.
Television revenue fell 13.3 per cent to $630 million, while television expenses dropped to $584 million, from $644.6 million. Pre-tax earnings from its flagship television business fell 44 per cent to $46.1 million. As expected, no dividend was declared.
Ten closed down 1.7 per cent to 28.5¢, against a flat market.
Frequently Asked Questions about this Article…
The $200 million debt facility is aimed at helping Ten Network, an embattled broadcaster, to spend its way out of the ratings doldrums. This facility is backed by billionaire shareholders like James Packer, Lachlan Murdoch, and Bruce Gordon.
Ten Network reported a $285 million loss due to several factors, including $336 million in one-off charges such as restructuring costs and a $292 million write-down on the value of its TV license. Additionally, revenue for the year fell by 22%.
The key shareholders backing Ten Network's $200 million debt facility are James Packer, Lachlan Murdoch, and Bruce Gordon. Gina Rinehart, another major shareholder, supported the network entering into the lending facility but did not participate in the guarantee.
Ten Network faces several challenges, including high costs from multichannel broadcasting, competition from rival networks with long-term sports deals, pressure in the advertising market, and losing viewers to online platforms.
Ten Network plans to improve its audience ratings by focusing on new sports content like the T20 Big Bash League and the Sochi Winter Olympics, as well as targeting the lucrative 25-to-54 'young at heart' market.
The outlook for Ten Network's advertising market shows modest growth in the near term. However, there is more confidence in the advertising market since the federal election, and the network expects ratings to improve with new programming.
Ten Network's television revenue fell by 13.3% to $630 million, while expenses dropped to $584 million from $644.6 million. This reflects the network's ongoing financial challenges and efforts to manage costs amid declining revenue.
The shareholder vote in December is significant for Ten Network as it will determine the approval of the proposed $200 million debt facility, which is crucial for the network's strategy to recover from its financial difficulties and improve ratings.
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