Discovery Walks Away From Auction for Australia's Ten Network

The company was looking for control of Ten in a joint bid with Foxtel, in which News Corp owns a 50 percent stake, but the board offered only a minority stake.

Discovery Communications has walked away from the auction for Australia's Ten Network, sources confirmed.

The TV networks company, led by CEO David Zaslav, last year made a joint bid for the broadcaster with pay TV operator Foxtel in which Rupert Murdoch's News Corp owns a 50 percent stake. The partners recently lowered their bid price.

The Australian Financial Review reported that Discovery was opposed to the Ten board's alternative suggestion that it and Foxtel take not a controlling stake, but only a 14.99 percent stake each. The report said that Foxtel still has to decide whether to walk away, find a new partner or acquire a 14.99 percent stake on its own.

Ten's biggest shareholder, billionaire Bruce Gordon, has pushed for an alternative deal to inject up to $175 million into the company. It would also give him convertible stock that would allow him to increase his stake in the beleaguered network should Australia’s cross-media ownership laws be changed.

Gordon owns a 14.9 percent stake but is prevented from moving beyond 15 percent under the Australian government's media-ownership rules. Other Ten shareholders include 21st Century Fox and News Corp co-chairman Lachlan Murdoch and casino mogul James Packer, who jointly own a stake of close to 18 percent.

The companies declined to comment. Ten airs such U.S. ratings hits as Empire and NCIS.

Twitter: @georgszalai