Network TEN has entered voluntary administration and appointed Korda Mentha as administrators who will look to “potential sale or recapitalisation of the business.”
The announcement follows Lachlan Murdoch and Bruce Gordon refusing to back new loans for the ailing network.
In a statement the network pointed to renegotiating new US output contracts, which has been agreed in principle with CBS and 20th Century FOX but not finalised, and the need for the passage of media reforms, to be tabled in parliament tomorrow.
Administrators plan to work closely with management, employees, suppliers and content partners and continue operations as much as possible on a business as usual basis.
Today CEO Paul Anderson advised staff that payroll went through as normal today, and redundancies are not on the cards at the moment. He quashed rumours of SKY News replacing TEN News and spoke to the network’s positive programming line-up.
Ten Network Holdings Limited (ASX: TEN) (“TEN” or “the Company”) announces that Mr Mark Korda, Ms Jennifer Nettleton and Mr Jarrod Villani of Korda Mentha have been appointed as voluntary administrators of the Company and each of its subsidiaries listed in the attached schedule (together the “Ten Group”) by the Ten Group Directors.
This decision follows correspondence received from Illyria and Birketu over the weekend which left the Directors with no choice but to appoint administrators.
This decision comes despite the Ten Group making significant progress to realise the potential sources of improvements to future earnings identified in the Company’s Directors’ Report contained in its Half Year Financial results announcement, that is:
• delivery of the cost and revenue initiatives identified in the transformation process currently underway;
• renegotiation of material programming contracts; and • reduction in Federal Government imposed licence fees.
In relation to the transformation process, the Company has identified initiatives that are expected to have a positive impact on earnings in the order of at least $50 million in FY18 and potentially more than $80 million per annum by FY19.
In relation to the renegotiation of programming contracts, the Company has agreed in principle the vast majority of the commercial terms of replacement volume content supply agreements with its US studio partners, Fox and CBS, although final terms have not yet been formally agreed. The effect of these replacement content agreements, if finalised and implemented, would be to reduce by approximately 50% the Group’s future liabilities for US content, while still allowing TEN access to the best productions of those studios over the medium term.
In relation to the reduction in Federal Government imposed licence fees, TEN anticipates that after the changes to regulations anticipated to be tabled in Parliament tomorrow pass through the Parliamentary process, the reduction in licence costs for TEN in FY17 will be in the order of $22 million and, in FY18, $12 million.
The administrators have advised the Company that they will work closely with management, employees, suppliers and content partners while they undertake a financial and operational assessment of the business. During this period, the Administrators intend to continue operations as much as possible on a business as usual basis.
The Directors of TEN regret very much that these circumstances have come to pass. They wish to take this opportunity to thank all TEN employees and contractors for their commitment and enthusiasm for TEN’s programs and business. In particular, they would like to express their sincere gratitude, respect and admiration for TEN’s leadership team, who have achieved everything the Board has asked them to do over the past few years in very challenging circumstances. They wish TEN and its management TEN all success in the future as the Administrators look to the potential sale or recapitalisation of the business.