$200m punt on Ten fightback
Ten Network’s billionaire shareholders have provided a personal guarantee for a $200 million debt facility aimed at helping the embattled network spend its way out of the ratings doldrums.
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.