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Fin Review feature goes deep inside TEN

The Financial Review goes deep behind the scenes to ask "Who killed Channel TEN?"

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A must-read today is a lengthy article by James Chessell in the Australian Financial Review on TEN’s managerial mishaps dating back to its reign under former CEO Grant Blackley to Lachlan Murdoch and then James Warburton.

“Ten ways to kill a network” is brimming with lots of behind the scenes politics, with colourful players James Packer, Gina Rinehart, David Mott and more.

As an example of the style of the piece, here’s what happened when Seven’s Kerry Stokes learned that Lachlan Murdoch had signed James Warburton.

The Seven chairman was on the line and he wasn’t happy. “What the f–k are you doing?” an apoplectic Stokes demanded. “I’m going to kill your company. I’m going to f–king kill your company.” Stokes ranted for a few more minutes before hanging up. Murdoch was shaken but kept his cool and didn’t mention the tirade when he returned to the boardroom. Afterwards, he made a legal note. “Just in case the ACCC [the Australian Competition and Consumer Commission] ever accuses the TV networks of conspiring together,” he joked later.

Another memorable passage details when CEO Grant Blackley was aboard a boat on Sydney Harbour with James Packer and Murdoch.

(Packer) then got stuck into Blackley for not signing up Hamish & Andy. The popular comedy duo had a long association with Ten during which they had filmed a number of well-received specials. Their irreverent and accessible brand of humour was a perfect fit with the network. However, Nine wanted a piece of the action. Hamish & Andy would lower the average age of Nine’s audience and give its line-up some much needed “edge”. Packer was furious Blackley had let the duo sign a two-year deal with a rival network. Packer insisted the comedians were good value despite asking for about $8 million to do 10 episodes. Blackley countered they had also wanted a $4 million sign-on fee. He said he wasn’t prepared to go beyond what he considered to be a break-even point of $1 million an episode. Packer told Blackley he was a “f–king idiot”. Hamish & Andy actually signed for about $1.4 million an episode, meaning Blackley was closer with the numbers. But Packer had identified a bigger problem. Nine’s ability to steal successful programs from under the nose of Ten executives hurt the third-ranked network time and time again.

There is much more to glean from this feature (including how TEN let The Voice slip away from its grasp) which may take you 15 minutes to read.

But it’s the best article on TEN I’ve read all year.

Check it out here.

21 Responses

  2. Yes it does come down to The Voice. I was told back in February that Nine’s future was all dependant on The Voice. It it did not work, Nine were in deep poo poo….They were right.

    What is interesting is since TEN arrived in the 60’s (im talking Melbourne here…don’t know about the other markets) we have never had a moment when all three networks were firing. Ten has always been the third network(until 2012 when it has fallen to 4th). In the mid to late eighties when TEN were neck and neck with Paker’s Nine network, Seven were a very distant third. Seems like Australia has never had the market for 3 commercial networks (or 4 if you include the ABC) So who made the decision that the market could afford so many multi channels in this Pay TV/ internet focused market? Each network offering two multi channels and one primary channel is just overkill. HD being the primary channel and one SD should be the maximum….Cause these TV networks are going to start go bust before too long. And that would be very sad!!!

  3. To cope with the increased difficulties of holding 16-39s Ten has tried various approaches over the last 5 years.

    Blackley tried to broaden the demographics and go head to head with 2, 7 & 9 evening news and current affairs and failed.

    Murdoch tried to go back the past by returning to being a low cost 16-39 focused network. He also tried to compete in the breakfast market 2, 7 & 9 have created by poaching radio listeners, and failed.

    Because they couldn’t outbid 7 & 9 for big reality TV shows Wharburton tried to create his own reality TV shows which had to be launched during the @l^mp!cs and they all failed.

    Of course Channel 10 wants the Twenty/20 but so do Seven and Nine/Foxtel (who are most likely to get it). Not really a lot Ten could have done about all this and a lot of it wasn’t about primetime.

    In the end it really just comes down to the Voice. Channel 10 bid $18m for a show without the huge celebrities which on a smaller network would not have been such a big hit. Channel 9 bid $20m plus $4m for the big names and won big. Otherwise Channel 9 could be in receivership and we could be talking about the destruction of the Nine Network instead. Hindsight is a wonderful thing.

  4. A good article, though it focuses on the personalities and misses some of important things in the industry as a whole.

    The key thing is that the internet, DVRs and secondary channels have fragmented the 16-39 market. That makes them harder to get and also drives up the advertising premium for when you do get them.

    Channel as 3rd network has been squeezed and everything they have tried has failed. But spending more money than they could possibly afford wasn’t going to work either. Channel 7 and 9 have gone through $8b worth of equity defending their ratings positions and pretty much destroyed the equity funds that owned them.

    It is quite possibly the case that the TV market will only support 2 large commercial FTA anymore. And that all of this will come to be seen as just reorganising the deck chairs.

  5. The Hamish and Andy deal with Nine was 17 mill for 15 episodes and even though they’re usually filmed overseas, they wouldn’t need a big camera crew to film them, other than a couple producers and writers to script their stuff.

    Yes it is a lot, considering how unfunny they are, plus they still do a once a week 2 hour radio show on Austereo. Their deal with Nine for won’t last forever, it’ll come up for renewal and if Ten are willing to bid, they’d probably have to offer at least 20 mill to beat NIne.

  6. All to cosy for me! Packer in speedo’s on his boat trying to tell Blackley what to do. Stokes screaming down the phone to Murdoch! Fallon trying to entice Reinhart, and Warbuton trying to stick it up Leckie. My God a TV series for 10 in the making right there! go.

  7. That was an absolutely brilliant article that I thoroughly enjoyed reading. It perfectly explains the gradual but steady downfall over the past few years.

    I think the biggest problem for Ten is that while it used to be extremely profitable operating in the youth market, that market is rapidly changing and declining, making it much, much more difficult to turn a profit. The youth are the first ones to embrace new technology and are turning away from FTA TV in droves.

    There is no easy solution for Ten. Yes they should have secured a marquee sport (maybe cricket in the future?) but they could not have known The Voice and Big Brother would be so successful on 9 (I certainly didnt think it just as I do not think AGT will be a hit on 9 next year). They will continue to rely on fairly solid performers like Masterchef and Biggest Loser but even these continue to suffer declining ratings as the formats become more tired. Its risky launching a huge new nightly format as they discovered with The Renovators.

    I think Ten have some good ideas, they just aren’t well executed. The Breakfast format could work by being a point of difference to Sunrise and Today in a Project/Circle format rather than just trying to copy what 7 and 9 do with a smaller budget. Similarly, the news and Project experiments were a good idea, but George Negus was too old for a youth station. The Shire could have worked if they had a decent group to document (I think Geordie Shore is hilarious). Instead of just coming up with their own version of what everyone else is doing (i.e. EDN) they should be taking risks which is what they used to do so well.

    Ten can’t seem to work out what to do with their 6pm – 7.30pm slot the more they change things, the more frustrated their viewers get. Don’t keep chopping and changing – let viewers learn when things are on and don’t start or finish them late.

    My suggestion for their weeknight line-ups would be:

    6pm – Simpsons – don’t bother trying to compete with 7 and 9 news – you won’t win
    6.30 – The Project – this would be a real point of difference to the junk of TT and ACA
    7.00 – Neighbours or Modern Family or similar (Seinfeld? Friends?)
    7.30 – Biggest Loser/Masterchef/Australian Idol etc
    8.30 – Strong proven popular dramas and miniseries – Offspring, Homeland, Good Wife, NCIS, Julian Assange, Puberty Blues etc
    9.30 – Fast-tracked edgy, new hit overseas shows – Breaking Bad, Boardwalk Empire, Walking Dead, Newsroom, American Horror Story etc. Fast-track within 24 hours, not 1 week (this is the only way to stop people downloading)
    10.30 – Late News w/ Hamish McDonald
    11.00 – Project repeat.

    There’s no easy-fix for Ten. I wish them luck but doubt their position will be much improved in 12 months time.

  8. The Hamish and Andy pay issue is a common misconception. Whether you believe they deserve it or not, the 1.4 figure is to create each episode. Their actual pay-packet comes out of the larger figure.

  10. @peter – the situation is not as simple as that. It’s a bit like a shop advertising products at prices below cost to get people in the store and spending money.

    Having the AFL (or NRL) has a halo effect on other programming. Obviously, there is a tipping point where the specific loss on the program exceeds the overall benefit in other areas.

    It’s the same thinking behind broadcasting the Olympics, or cities/countries paying to host them.

  11. Fantastic article, took a long time to read. A who killed Ch 10 book could be made from this article.
    Having read it just now wish the people who said Ch 10 should have try harder to get the AFL rights 2-3 years ago now know that they were losing $5-10 million a year having their parts of the rights so it was a business decision.

  13. Yes, thanks for the tip David, that was a very interesting read. Answers many of the questions I had about the whole sorry mess.
    “Packer seemed to loom larger than life wearing only a pair of Speedos as the sun set” – lol & barf!

  16. Rinehart certainly paid a lot of money in shares to be made a board Director and then demand her favourite right wing journalist, Andrew Bolt ,have his own TV show on the newtwork

  18. ty for the link David… it was an interesting read and demonstrates how egos can destroy a business. Ten recently fired a bunch of news staff and presenters to contain costs; a move I feel was little more than a knee jerk reaction. From the article it would appear that those terminations should have been expanded to include another 5-6 folks at the executive management / board level.

    Ten has a long way back and I for one can’t see it happening whilst the names Murdoch and Packer are associated with the company.

  20. Hamish & Andy got $1.4m per episode just in pay?

    God when you add in the production costs of a couple of a hundred thousand that is substantially more expensive then any drama series ever produced in Australia including Sea Patrol!

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