Moguls try again before hanging Ten

* This article was published prior to the Ten Network's confirmation of its capital raising.

The recent history of Ten Network would probably make a better, albeit somewhat scary, reality show than most of the abysmally rating programming the network has been serving up since the billionaires and would-be media moguls took control of its boardroom.

The latest twist in the saga came after the group, having denied any need to raise new capital after the $200 million it raised earlier this year and the $98 million sale of its outdoor advertising business, requested a trading halt "in relation to a proposed capital raising".

The band of moguls within its boardroom and on its register, it appears, are about to dig into their wallets once again to prop up a network whose ratings and profitability have imploded since they gained control of its affairs.

Fairfax Media has suggested Ten will raise $225 million at the distressed price of 20 cents a share, with Lachlan Murdoch, Gina Rinehart, James Packer, Bruce Gordon and Jack Cowin resigned to taking up their share of the issue despite the hundreds of millions of dollars they have already lost in their media misadventure.

Ten said the trading halt was in relation to the capital raising and "other initiatives". What those other initiatives might entail is a mystery, given that Ten has little left to sell and has already cut costs to the point where it could be argued it has undermined its ability to compete with its network rivals.

Stephen Conroy's recent removal of the 75 per cent rule (no network can service a catchment area containing more than 75 per cent of the population) might, however, open up the option of a merger between Ten and its Southern Cross regional affiliate that would generate some synergies but also provide a bigger base from which a renewed struggle to turn around Ten's fortunes can be mounted.

James Warburton, lured to Ten by Murdoch when he was in line to run the top-rating and financially strong Seven Network, has been cash and capital-constrained in his efforts to lift Ten's ratings and revenues by acquiring better programming, even though he has said he will protect the network's ability to invest in programming despite his latest iteration of the continuous cost-cutting program Ten has been subjected to in the past couple of years.

With the resurgent Nine Entertainment on the verge of being recapitalised by its lenders, albeit with debt rather than the debt-free status David Gyngell hailed when his creditors agreed their debt-for-equity reconstruction of Nine, Ten is struggling to be remotely competitive. The ABC nearly out-rated it this year.

If it does get the capital raising away, at least the balance sheet threat will be averted. Ten had net debt of about $263 million at its last balance date and about $97 million of cash that presumably will have been augmented by the eventual completion of the sale, after a protracted process, of its outdoor advertising business less than a week ago.

That should have been sufficient to stabilise Ten but the general recession in advertising markets over the past few years which stripped $124 million of television revenue from Ten last financial year appears to have deteriorated even further, and quite sharply, in recent months.

The impact on Ten may well have been compounded by its own poor performance and a recognition that, even if Warburton has an effective strategy for improving its programming and ratings, there are no cheap, quick, easy or certain fixes.

While Ten is trying to reprise the strategy of targeting a youthful demographic that once made it, in relative terms, the most profitable of the networks, there is a question mark over how successful that might be in the digital era of multi-channelling, pay TV, internet downloads and audience fragmentation.

It would appear likely that the latest capital raising will be the last chance the current collection of Ten's wealthy benefactors will give the network. Even billionaires tire of continuously throwing good money after bad. Two years ago Ten's shares were trading at around $1.50 each. On Tuesday they closed at 33 cents.