Murdoch, Gordon combine stakes as Ten goes into administration | Major Businesses | Business
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Billionaires Lachlan Murdoch and Bruce Gordon have merged their shareholdings in Ten after the Australian free-to-air (FTA) broadcaster entered voluntary administration.

Network Ten Logo 14 June 2017Signalling a possible future takeover of the network, Gordon’s company Birketu and Murdoch’s investment vehicle Illyria combined their 15% and 7.5% shares in the struggling TV network.

Their withdrawal of credit support to Ten had triggered the insolvency process on 14 June. Administrator KordaMentha has now been appointed to run the company, after Gordon and Murdoch refused to guarantee an A$250 million finance package.

Australia’s third largest commercial TV network will be run “as much as possible on a business-as-usual basis,” Ten said in a statement to the Australian Stock Exchange.

Ten grew its revenue by 2.1% to A$341.4 million in the first half of FY17, and its commercial TV revenue share increased 1.8 points to 25.5%. However, during the same period, costs increased by 7.4% to $349 million.

Ten forecasts it will lose A$30 million this year in earnings (EBITDA) but says it has already begun its transformation process with plans that could increase earnings by $50 million in FY18 and more than $80 million in FY19.

“The Company has agreed in principle the vast majority of the commercial terms of replacement volume content supply agreements with its US studio partners, Fox and CBS, although final terms have not yet been formally agreed,” Ten said in a statement.

“The effect of these replacement content agreements, if finalised and implemented, would be to reduce by approximately 50% the Group’s future liabilities for US content, while still allowing Ten access to the best productions of those studios over the medium term.”

Ten expects to save a further A$22 million in FY17 and A$12 million in FY18 in costs if changes to the federal government’s licence fees are passed.

The government is tabling its media reform package in Parliament on 15 June and, in light of Ten’s situation, has called for Labour and the minor parties in parliament to pass the package as a matter of urgency.

Commercial TV lobby group Free TV has also cited the crisis at Ten as reason for the reforms to be urgently agreed.

“This puts the opposition, Greens and Pauline Hanson’s One Nation on notice that inaction on media reform has serious consequence,” said Harold Mitchell, chairman, Free TV. “The responsibility for the continued decline of the local media industry will sit with those that did not support the media reform package.”

Although administrators will consider the sale of Ten a potential option, any deal that Murdoch and Gordon may propose can only be viable if parliament passes the media reform package.

Currently, Australian legislation only allows an owner to have control of two out of three media outlets – such as television, radio and print – in one market. The government’s reform package seeks to abolish this ‘two out of three’ rule, although the Labour Party opposes this proposal.