The fading fortunes of the Ten network may yet have a dynamic reversal with the long awaited entry of pay-TV giant Foxtel into the ownership structure.
Under the deal, Foxtel is to take a 15% stake in ailing free-to-air group Ten Network, following months of negotiation.
The last year has seen Ten attempting to negotiate a deal with a new strategic shareholder that would recapitalise its balance sheet. Foxtel, with its News Corp and Telstra backing, was always the anticipated suitor.
At the same time the groups are merging their advertising businesses into Foxtel’s Multi Channel Network (MCN), which will create a dominant platform for dealing with advertisers.
The deal will see Ten raise A$154 million through a share offering, with Foxtel buying in around $77 million of the new equity. This will make Ten a 24.9% shareholder in Foxtel’s advertising business Multi Channel Network, which is to handle Ten’s ad sales immediately.
Significantly Ten will also have a two year option to buy a 10% stake in Foxtel’s subscription VoD service Presto.
Digital platforms and specifically streaming platforms may be the dormant weapon in this new media player. In the medium to long term, the combined content and streaming platforms strength of the two could be powerful in staving off the competitive threat of the new streaming platforms including Netflix and Stan. The deal will allow for synergies to co-operate on programming, cross-promotion, audience aggregation and to use their combined audiences and advertising to escalate their negotiating position for the rights to major live events, like sports programming.
“The board believes the agreements with Foxtel and MCN will materially enhance Ten’s business and better equip it to respond to the challenge of the ever-changing media and advertising landscape,” Ten executive chairman and chief executive Hamish McLennan said.
The deal also has significant ramifications for the advertising market with the MCN component. MCN chief executive Anthony Fitzgerald has told the media that he is a great believer that all of television, Free TV and subscription, should work together to promote the power of the medium. “As far as the audience is concerned it is all just television. It is fabulous that this deal will now be able to accelerate the breakdown of those barriers,” he was quoted as saying. He also pointed to Ten’s VoD service TENplay as being a key asset in the merger.
The estimated combined revenue of the MCN and Ten Network sales offer is over $1b.
Network Ten’s high- profile shareholders, Gina Rinehart, James Packer and Lachlan Murdoch are all expected to take up their entitlements in the fundraising. While Ten’s largest shareholder, media veteran Bruce Gordon and owner of the regional network WIN, who holds a 15% stake is yet to declare his hand in the deal.
The deal is binding on the parties, but subject to regulatory approval. The share sale could take place in September
