Administrator KordaMentha has been brought in to undertake a financial assessment of the situation, with a sale or recapitalisation process options on the table.
“This decision follows correspondence received from Illyria and Birketu over the weekend, which left the Directors with no choice but to appoint administrators,” Ten noted in a statement.
“Network Ten is a quality free-to-air TV network with a rich history of broadcasting well-known Australian television content. The administrators are confident that the network is an attractive asset which will find a buyer or will be recapitalised,” said KordaMentha partner Mark Korda.
“During this period, the administrators intend to continue operations as much as possible on a business as usual basis,” Ten noted in a statement.
The network claims to have identified “initiatives that are expected to have positive impact on earnings in the order of at least A$50 million [€34 million] in full year 2018 and potentially more than A$80 million per annum by FY19”.
It also claimed to have reworked terms of expensive output deals with Hollywood studios CBS and Fox, “although final terms have not yet been formally agreed”.
This would reduce its US content liabilities by 50%, while still giving Ten access to key shows from the two studios “over the medium term”.
The news comes after News Corp chief Lachlan Murdoch and WIN owner Bruce Gordon pulled their financial support from Ten, which has struggled financially in the past year despite improved ratings and channel performance.
Another significant shareholder, James Packer, has been seeking to sell his 7.7% stake, but has not been successful. None of the three investors will guarantee a new A$250 million loan, which needs to be in place by December when the currentA$200 million credit facility ends.
It emerged yesterday that Murdoch’s investment vehicle, Illyria, and Gordon’s Birketu had merged their respective 7.5% and 15% stakes, meaning they have passed the 19% mark that triggers a takeover bid. However, they have not commented on that possibility.
“The directors of Ten regret very much that these circumstances have come to pass,” Ten said in its statement. “They wish to take this opportunity to thank all Ten employees and contractors for their commitment and enthusiasm for Ten’s programmes 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 Ten all success in the future as the administrators look to the potential sale or recapitalisation of the business.”
16th February 2019