Discovery, Foxtel Lower Bid for Australia's Ten Network

Empire Pilot Still - H 2015

The new offer would enable big shareholder Bruce Gordon to keep a stake in the beleaguered network.

The five-month-long auction for Australia’s third-ranked free-to-air broadcaster, Ten Network Holdings, has taken a new turn as top suitors Discovery Communications and Australian pay TV group Foxtel, part owned by Rupert Murdoch's News Corp, submitted a revised, lower bid.

Ten airs U.S. ratings hits such as Empire and NCIS.

Financial details weren't immediately mentioned in Australian reports. Sources confirmed the lower bid for a smaller stake in the company, as opposed to the original offer to buy 100 percent control. Reports said the new offer removes a full control premium that was used in the original 17.5 cents-per-share bid (AUS23 cents), which was valued at $485 million.

The new offer came after major Ten shareholder Bruce Gordon, who owns regional broadcaster Win Corp., submitted an alternative proposal under which he would provide Ten with $53 million-$175 million in funding in exchange for convertible stock that would allow him to increase his stake in the beleaguered network should Australia’s cross-media ownership laws be changed, News Corp's The Australian reported. Gordon also wants to control two board seats under the offer.

Gordon holds a 14.9 percent stake in Ten and is prevented from moving beyond 15 percent under the Australian government’s media ownership rules. Gordon has previously said he would not sell his Ten stake and wants to be part of any revitalization of the network, which the new Discovery and Foxtel offer would allow him to do.

According to The Australian, Foxtel and Discovery "dropped interest in mounting a full takeover of Ten after being met with resistance" by Gordon. A former Ten owner, Canadian broadcasting company CanWest, controlled a majority of the network under a similar structure.

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.

Ten’s independent directors are currently considering both proposals with no indication of when a decision will be made. The companies declined to comment.

Georg Szalai contributed to this report.