Network Ten appears on increasingly shaky ground as new doubts emerge on whether the three billionaires who agreed to guarantee a $200 million lifeline in 2013 will extend the same support for the next round of funding.
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Ten Network reports $232 million loss
The free-to-air broadcaster is pinning its future on securing a new $250 million loan.
That scenario raises the real possibility of Ten falling into the hands of administrators unless corporate advisers are able to find alternative sources of funding.
The company is expected to tell the market on Tuesday morning that major shareholders have decided not to personally guarantee the company's debt when it applies for a new $250 million loan in December. Well-placed sources confirmed reports over the weekend in the Australian Financial Review that Lachlan Murdoch, with 7.5 per cent, and Bruce Gordon, with 15 per cent, would end their personal guarantees.
![Lachlan Murdoch could be caught by the two-out-of-three media rules, and James Packer has no interest in the media.](http://web.archive.org./web/20170615193155im_/https://www.fairfaxstatic.com.au/content/dam/images/g/q/9/k/6/t/image.related.articleLeadwide.620x349.gwp6ve.png/1497387982456.jpg)
The third backer, James Packer, is understood to be keen to sell his 7.7 per cent stake. Ten's shares last traded at 16 cents, giving the network a market capitalisation of just $59.1 million.
It is now up to the five-member board to tell the market how it plans to proceed and whether it will appoint administrators, which could give the broadcaster a chance to extract itself from onerous supply contracts with US networks CBS and 20th Century Fox.
A lengthy administration process would also give Parliament time to pass proposed media reform laws that would lift ownership restrictions and scrap broadcast licence fees (costing Ten about $23 million annually). But the new laws have not been introduced yet and Parliament has just nine sitting weeks left this year.
Mr Murdoch and Mr Gordon are both prevented from owning controlling stakes in Ten by the two-out-of-three and reach rules in media ownership laws.
![The biggest shareholder of Ten Network is Bruce Gordon, with 15 per cent of shares. He also owns regional broadcaster ...](http://web.archive.org./web/20170615193155im_/https://www.fairfaxstatic.com.au/content/dam/images/g/u/s/r/v/6/image.related.articleLeadwide.620x349.gwp6ve.png/1497468588973.jpg)
In late April the board warned there was material uncertainty about the group's ability to continue as going concern unless it was able to cut costs, renegotiate contracts with US suppliers, and secure licence fee cuts. It was also reliant on the three shareholders guaranteeing the next loan.
Back in 2013, directors also warned the cost and risk of other funding sources "made them unpalatable", raising questions about Ten's ability to find palatable sources of debt in coming months, especially given shareholder support was necessary to clinch an affordable and acceptable loan from Commonwealth Bank.
![Network Ten chief executive Paul Anderson.](http://web.archive.org./web/20170615193155im_/https://www.fairfaxstatic.com.au/content/dam/images/g/v/t/y/1/h/image.related.articleLeadwide.620x349.gwp6ve.png/1497295824633.jpg)
Network Ten has often struggled since it was launched in the 1960s, according to Mark Westfield, author of a history of Australia's media industry called The Gatekeepers.
"Every time Ten gets into trouble, the many times it has struck financial trouble, it has found a buyer," he said.
He sees Foxtel, which already owns 14 per cent of Ten, as the logical buyer, but this would require it to work around existing media ownership laws or wait until the reforms pass.
The 2013 debt package was negotiated under Ten's then-chief financial officer and now chief executive, Paul Anderson, with advice from Citigroup Global Markets. Ten had used $66.2 million of this facility at April, 2017.
The current chairman, David Gordon, is a former corporate adviser and lawyer. Other directors include Debbie Goodin, former trade minister Andrew Robb (who represents Gina Rinehart's 8.2 per cent), Andrew Lancaster, chief executive of Win Corporation and representative for Mr Gordon's 15 per cent, and Foxtel chief executive Peter Tonagh.
Seven West Media also has a 3 per cent stake through its company Network Investment Holdings.