Lachlan Murdoch Pulls Backing for Australia's Network Ten
Ten's shares were put into a trading halt as Murdoch said he wouldn't guarantee further loans to the broadcaster.
Lachlan Murdoch will withdraw his financial support for third-ranked Australian commercial TV broadcaster Network Ten after December this year, parent company Ten Network Holdings said Tuesday as it requested a trading halt of its shares with the Australian Securities Exchange.
The News Corp. co-chairman owns a 7.5 percent stake in the broadcaster of MasterChef Australia, The Bachelor and Australian Survivor. Murdoch and Bruce Gordon, another key Ten shareholder, through their private investment vehicles Illyria Ltd and Birketu have told the Ten board they won’t extend their guarantees to a new $188 million (AUS$250 million) credit facility after Ten’s current loan falls due on Dec. 23, putting the future of the broadcaster in doubt.
In a statement to the ASX, Ten said its board is “considering the position of the company in light of the position being taken by Illyria and Birketu and the range of restructuring and refinancing initiatives it has underway. Pending these determinations over the coming days, Ten considers that its shares will not be able to trade on an informed basis and, accordingly, requests the trading halt.”
Ten shares were priced at 12 cents a share when trading was stopped, giving the broadcaster a market capitalization of just $45 million (AUS$59 million).
Last month Ten said it was seeking a new credit facility of $188 million and warned there was “material uncertainty about the group's ability to continue as a going concern” unless it was able to renegotiate “onerous” program supply contracts with CBS and 21st Century Fox and secure license fee cuts from the government.
The Australian government is currently considering loosening media ownership rules, a move recently welcomed by major local media companies including Ten, Foxtel and News Corp, who all said, “Change is crucial to bring media regulation into the digital age and preserve the future viability of the sector, which supports more than 30,000 jobs."
“Australian media operators must be allowed to compete more effectively against multinational internet giants that are taking hundreds of millions of advertising dollars out of Australia,” the companies' CEOs told the government last month.
If current media ownership laws are repealed, News Corp or Foxtel, its 50 percent pay TV subsidiary, could mount a takeover of Ten.
Ten said it's expecting the trading halt to be lifted within 48 hours.