Australia's Network Ten Goes Into Administration

Lachlan Murdoch - Getty - H - 2016
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The Ten board had "no choice" but to appoint administrators after key shareholders Lachlan Murdoch and Bruce Gordon withdrew financial guarantees.

Australia’s third-ranked commercial TV broadcaster, Network Ten, has been placed into voluntary administration, following the decision by key shareholders Lachlan Murdoch and Bruce Gordon to withdraw financial guarantees for the company.

In a statement to the Australian Securities Exchange on Wednesday, Ten’s board said it was “left with no choice but to appoint administrators” after Murdoch and Gordon indicated they would not guarantee further credit after Ten’s current $200 million debt agreement expires in December. Ten shares were placed in a trading halt on Tuesday pending the Board’s decision to go into administration. Ten's market capitalization was $45 million (AUS$59 million) before the trading halt.

Mark Korda, Jennifer Nettleton and Jarrod Villani of Korda Mentha have been appointed as voluntary administrators of the cash-strapped broadcaster and will look at a sale of the company or a recapitalization of its business.

The move comes despite Ten “making significant progress to realize the potential sources of improvements to future earnings,” with up to $50 million for the 2018 financial year and $80 million for fiscal 2019. The savings come from the renegotiated program supply agreements with CBS and Fox, license fee reductions from the Australian government and other cost-cutting initiatives under a recently implemented “transformation program”.

Ten said the company has “agreed in principle the vast majority of the commercial terms of replacement volume content supply agreements with its U.S. studio partners, Fox and CBS, although final terms have not yet been formally agreed. The effect of these replacement content agreements, if finalized and implemented, would be to reduce by approximately 50 percent the Group’s future liabilities for U.S. content, while still allowing Ten access to the best productions of those studios over the medium term”.

Administrators “intend to continue operations as much as possible on a business-as-usual basis," the company added.