Network Ten in trading halt
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Network Ten's board of directors is likely to put the struggling free-to-air broadcaster into voluntary administration after losing the support of its three billionaire shareholders, Lachlan Murdoch, Bruce Gordon and James Packer, for a new $250 million loan.
Ten's board is due to meet on Wednesday morning to canvass its options which industry observers believe will include a further suspension of sharemarket trading and a likely move to put the network into administration. KordaMentha would likely be appointed as administrator to the third-ranked metropolitan broadcaster.
Mr Murdoch and Mr Gordon pulled financial support for the company, telling Ten late on Friday they would not support a new $250 million loan the network needs to stay afloat, as revealed by The Australian Financial Review on Sunday evening.
The pair, along with Mr Packer, are guarantors on an existing $200 million facility for Ten from the Commonwealth Bank of Australia, due to expire and be repaid in December. Ten has been seeking a new $250 million loan to replace the existing one.
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Ten's newly appointed financial advisors, Moelis & Co, led by head of corporate finance Chris Wyke, need the network to rework expensive US content deals, which are dragging Ten's earnings down, to secure alternative finance.
It's understood Moelis has been confident of securing alternative finance to its billionaire shareholders for Ten and have been speaking with a number of parties.
But the removal of support by Mr Murdoch and Mr Gordon puts Ten's board in a bind.
Given Ten has not had time to renegotiated its onerous content deals with US studios 21st Century Fox and CBS, industry sources believe the board of directors will put the free-to-air broadcaster into administration.
Sources said Ten management believe they have a plan in place to keep the metropolitan broadcaster public and viable.
![Lachlan Murdoch (left), Bruce Gordon (centre), James Packer.](http://web.archive.org./web/20170702193241/http://www.afr.com/content/dam/images/g/v/t/j/m/a/image.imgtype.afrArticleInline.620x0.png/1498487692504.jpg)
But, given material uncertainty around whether it can drastically reduce the more than $150 million it pays to Fox and CBS, observers believe the board will have no choice.
Sources said Ten had made progress on its renegotiations with CBS and Fox, but not enough to materially impact the contracts. If Ten became insolvent it would have a legal right to terminate the contracts.
At its half-year results, chief executive Paul Anderson outlined Ten's three key sources of improvement for future earnings: a cost and revenue transformation program, renegotiation of material programming contracts, and cuts to broadcast licence fees.
Ten has put its transformation program to work and the government has signalled a drastic slash to licence fees, as revealed by the Financial Review in May, the only remaining point is reworking the Fox and CBS deals.
![Lachlan Murdoch decided against backing Ten's new loan.](http://web.archive.org./web/20170702193241/http://www.afr.com/content/dam/images/g/p/f/t/6/k/image.imgtype.afrArticleInline.620x0.png/1497390535196.jpg)
Mr Murdoch owns 7.7 per cent of Ten through his investment vehicle Illyria. Mr Murdoch is co-chair of News Corp, which via Foxtel, its 50-50 joint venture with Telstra, owns 13.9 per cent of Ten. He is also a former chairman of Ten and is executive chairman of Fox.
Mr Gordon is Ten's largest shareholder with 15 per cent. UBS is understood to be working for Mr Packer, who had shopped around his 7.7 per cent stake in Ten, with few interested buyers.
Administration and potentially receivership would not spell the end of Ten.
Industry insiders believe this could put Mr Murdoch and News Corp in a position to take control of Ten, perhaps through its half-owned pay television business Foxtel.
![Bermuda-based billionaire Bruce Gordon is Ten's largest shareholder.](http://web.archive.org./web/20170702193241/http://www.afr.com/content/dam/images/1/1/x/f/c/e/image.imgtype.afrArticleInline.620x0.png/1497390535118.jpg)
The receiver, which wouldn't report to the shareholder guarantors, would have a responsibility to get the best price for the TV network. The guarantors would have the right to bid for the assets in an auction, according to the loan agreement.
Mr Murdoch, via News Corp, and Mr Gordon, who owns Ten's regional affiliate WIN Corporation, are the most likely bidders. However, both would need the government's media ownership regulation changes to pass through Parliament before they could buy Ten.
Should the government be successful in its attempts to reform media ownership laws, observers believe Mr Murdoch and Mr Gordon could make Ten a joint-venture, rather than bidding against each other and overpaying for the network.
Ten shares went into a trading halt on Tuesday morning as the board weighed up administration.
"Ten's board is considering the position of the company in light of the position being taken by Illyria and Birketu and the range of restructuring and refinancing initiatives it has underway," Ten company secretary Stuart Thomas said in a statement to the Australian Securities Exchange.
"Pending these determinations over the coming days, Ten considers that its shares will not be able to trade on an informed basis and, accordingly, requests the trading halt."