Billionaires Graveyard!, page-56

Personally I wouldn't write the Ten network of just yet! Sometimes it pays to step back and look at the bigger picture.

According to a report in the Australian Financial Review Ten's broadcasting licence, although written down over the last few years is probably worth close to $300 million to Foxtel.

The main reason is that the broadcasting licence is very valuable to the Murdoch's and Foxtel. Fox Sport really needs access to the major sports that are protected by the anti-siphoning list if they are to move forward and continue to remain competitive against local and international competition.

If Foxtel or another company can become majority holder in Ten, (the media reform bill needs to pass the senate first and has just been given a major boost), then, under the anti-siphoning laws, they can broadcast the event on channel Ten and simultaneously broadcast on their own pay TV network.

Also another reason why Ten is struggling is because of the content contracts they have with the likes of Fox studios. A lot of commentary has been banded around why Lachlan Murdoch would risk going guarantor for Ten but they also fail to realise the huge amount of money the Murdoch’s are making from channel Ten through Fox. (Ten paid $120 million this last FY between Fox Studios and one other US network - can’t remember which one it was).

Foxtel has subscription revenue of $3 billion as well as advertising revenue of $500 million. If the Media Reform Bill gets through the Senate the cost of gaining control of Ten at the current market cap would be almost insignificant to them.

But, being able to then bid for major sporting events protected by the anti-siphoning list, their access to the huge content available through Fox Studios as well as the synergies that will develop between Ten and Foxtel, will see them able to compete against the likes of Netflix and other international SVOD companies.