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Nine on the brink

On the same day Seven reveals its 2013 programming, Nine faces its own future.

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Tuesday October 16 could go down as an ominous day in Australian television.

On one side of Sydney Harbour the Seven Network is set to unveil its key programming for 2013.

And on another Nine is struggling for its very survival.

It’s the kind of timing that would have normally elicited colourful comments from former Seven CEO David Leckie. It isn’t in Tim Worner’s style to match his predecessor’s robust speeches. He is expected to focus on the task at hand, along with Head of Programming Angus Ross and Head of Production Brad Lyons tonight at Luna Park.

But it would be ironic if Nine upstaged Seven in media coverage, if not in the way it would prefer.

Nine chairman Peter Bush and CEO David Gyngell will host a 9am session at law firm Gilbert + Tobin in Park Street, attended by representatives of US hedge funds Apollo and Oaktree, and Goldman Sachs.

If there is no agreement today on a recapitalisation, the directors will have to determine if there is any real prospect of a consensus emerging. If the parties are seen to be locked in conflict with no pathway to an agreement, the board will have no choice but to call in administrators.

If Nine’s directors appoint administrators, the US funds are expected to appoint KordaMentha as receivers who will then control the business on their behalf.

Lots of things change when a company is placed into administration. Contracts for programming can be compromised, employment contracts can be reset and, most importantly, advertisers can be scared off by the uncertainty.

Nine’s $500 million output deal with Warner Bros, which delivers key programs, including The Big Bang Theory, Two and a Half Men and The Mentalist has not delivered in recent years. Receivership could allow for this to be renegotiated.

But seeing the NRL rights, and potentially the upcoming Cricket Australia rights, broken up and sold to Seven or TEN would be a massive blow.

Nine’s woes are not a direct result of its on air performance. 2012 has been far more positive for Nine than recent years with The Voice, The Block, Olympics, House Husbands and Big Brother all delivering. Nine will win the year in key demos.

But private equity group CVC Asia Pacific paid too much when it purchased PBL Media off James Packer and now the lenders are seeking equity for debt.

It is understood that Nine could continue operating and paying its debts as they fall due until about mid-November.

Source: The Australian, Sydney Morning Herald, Brisbane Times

18 Responses

  1. @ Hoin…..it is a vastly different background in TV land when compared to the halcyon days of 1990-92. What ever deal is struck will undoubtably have some impact on what we see on the screen..

  3. Channel Nine’s signal will not go to black. TEN went through the same thing in 1990-92. During that period TEN went even further downhill than Nine, first going into receivership, then administration then liquidation. The network stayed on air during all of this.

    Westpac – which brought about these actions – formerly took over, brought TEN back to profitability then sold it off as a going concern.

    So if history is any guide, there is a light at the end of the tunnel for Nine.

  4. There’s a lot they need to do.The US Sitcoms are fine and most of the reality shows too but it’s the home grown crap in most cases that is killing them.Do we really need Three New Bulletins a Day or Trashy Current Affairs Shows(Ditch ACA and keep 60 minutes) I could go on but will leave it there for today.

  5. @ricoz 9 haven’t paid even half that amount for the 5 year NRL contract. But sport is the only show that guarantees high and consistent ratings and often lifts the entire network schedule. It’s probably worth every cent.

  6. So, if Channel 9 have to “sell off” does that mean they would be looking to sell The Voice, Big Brother and other programmes to other stations to get some money basically?

    and with the NRL rights, they would have to see them to another channel?

  7. I’m not a business or financial person but Maths101 would suggest paying 1 billion dollars for something when you know you’re on the brink of financial collapse is not a good thing.

  8. I agree Nine will not shut down but they won’t have the funds to go after some sports and shows now, which is good but me, opens the way for TEN to get the V8s back for next year!

  9. Maybe NRL fans may get what they have been begging for, 4 live FTA games a week. (7&10 deal) what a dream come true!!!!!. The NRL Commission got what they paid for. Crap!

  10. @Secret Squirrel,
    Where did anyone say Nine’s signal would go black? People are more speculating whether key import titles and sports rights will go, not that Nine will cease to exist.

  11. People, did you read the article? This has nothing to do with Nine’s recent performance ratings-wise – it will actually win the year in the major demos and these are what the advertisers care about. Total numbers are for headlines and children.

    And no, Nine is not suddenly going to stop broadcasting – the Nine Network is the part of Nine Entertainment Co that is performing the best so that will be the last thing to disappear. The impact to Nine’s broadcast schedule will prob not be that great, altho’ selling the NRL rights would be a quick and easy way to generate a bunch of cash so that might happen.

  12. Channel 9 will still exist.

    It just may not have the rights to the NRL in 2014.
    Or the rights to the Mentalist. But then there is no guarantee there will be a Mentalist after S5 anyway.

    Then again depending on this morning’s meeting, or what the creditors and administrators figure out if a deal isn’t reached, there could be no significant changes what-so-ever.

  14. Ironically it’s not a performance issue as 2012 has been one of Nine’s best years in a long time. I would hate to see this momentum stifled as they’re the only real competitor to 7 at the moment. They would take years to recover under administration and the damage of losing sports rights could be irreparable.

  15. does this mean that we will loose the mentalist and not see it anymore on nine ? and so if i understand you correctly, you are saying there will be no more channel 9 next year? if so if so i hope they make another chanel to replace 9. but i hope this is not the case ?

  16. We, the consumers, have repeatedly told Nine (and Ten) what they need to do, with great clarity. If they choose to keep chasing some elusive notions that continue to fail them, they have only themselves to blame.

  17. At least ch9 should almost make it to the non ratings season. Will this be the first shock of the digi revolution. A shake out is due, the execs have had their collective heads in the sand for way too long…..

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