Written on the 14 June 2017 by Ben Hall

BILLIONAIRES Lachlan Murdoch and Bruce Gordon have joined forces and merged their holdings in the Ten Network (ASX: TEN) in a move that could rescue the struggling broadcaster and place it under their control.

Bruce Gordon's investment vehicle Birketu, which holds 15 per cent of shares, announced it would merge its holdings with Lachlan Murdoch's 7.5 per cent stake which is held in his Illyria company. 

The deal was revealed in a letter dated June 9 that was released to the ASX late today.

It's believed the deal would pave the way for the News Corp co-chairman and the WIN Corporation owner to work together to restructure the network and possibly take control.

The combined 22.5 per cent stake between Murdoch and Gordon is above the 19.9 per cent threshold where a takeover bid can be launched.

The tie up was revealed just hours after Network Ten has announced it will go into voluntary administration after failing to secure a key loan from its three billionaire investors Murdoch, Gordon and James Packer, Crown Resorts' (ASX: CWN) majority shareholder, who owns 7.5 per cent.

Packer has reportedly had his stake on the market for some time but has been unable to find a buyer.

Shares in Ten Network Holdings were placed in a trading halt on Tuesday for up to 48 hours after the company confirmed it had received "correspondence" from Lachlan Murdoch and Bruce Gordon.

That correspondence confirmed they would pull the pin on funding an extended $250 million to the broadcaster.

There was no mention of James Packer, but it is understood he too has decided against funding the loan. He has also not been linked to the tie-up between Murdoch and Gordon.

Ten Network staff were told of the news this morning and the shock announcement was made just before midday. Veteran newsreader Hugh Riminton tweeted a quote from TEN Network CEO Paul Anderson.

"This is extremely disappointing for all of us," Anderson says.

In a statement to the ASX, the company says the decision to halt the funding of the loan "left the directors with no choice but to appoint administrators".

"The administrators have advised the company that they will work closely with management, employees, suppliers and content partners while they undertake a financial and operational assessment of the business. During this period, the administrators intend to continue operations as much as possible on a business-as-usual basis," the statement says.

"The directors of Ten regret very much that these circumstances have come to pass. They wish to take this opportunity to thank all Ten employees and contractors for their commitment and enthusiasm for Ten's programs and business.

"In particular, they would like to express their sincere gratitude, respect and admiration for Ten's leadership team, who have achieved everything the board has asked them to do over the past few years in very challenging circumstances.

"They wish Ten and its management all success in the future as the administrators look to the potential sale or recapitalisation of the business."

The three billionaires are the guarantors on a $200 million loan which has been keeping TEN alive and the company has been asking them to increase this loan to $250 million when the initial loan with Commonwealth expires in December.

Thomas says the board of TEN requested the trading halt to allow it to investigate possible restructuring and refinancing initiatives.

The company says the decision to go into administration was made despite last-ditch efforts to cut costs and renegotiate expensive programming deals with US studios CBS and 21st Century Fox, which cost the broadcaster around $150 million a year.

As part of its transformation program, the company had identified savings of at least $50 million in FY18 and potentially more than $80 million per annum by FY19, but those cost-saving plans are in serious doubt as administrators KordaMentha work out a recapitalisation plan or potential sale of the business.

The Ten Network is Australia's third-placed commercial television network, behind Nine and Seven, and it has struggled to attract viewers to its programming and its advertising revenues have taken a hit as a result.

The company recently announced a $232.2 million loss. TEN shares last traded on Friday at $0.16 and in the past year its value has plummeted 85 per cent from $1.16.

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Author: Ben Hall





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