choice of ceo hints at news corp

February 25, 2013, 9:51 AM
Ten Network’s Choice of CEO Hints at News Corp. Bid, Says CLSAArticle Comments (1) Deal Journal Australia HOME PAGE

By Gillian Tan
CLSA reckons the chances that News Corp NWSA +1.13%. may move to take over Ten Network Holdings TEN.AU +6.78%are on the rise after the free-to-air television broadcaster appointed a new chief executive.

In a filing to the Australian Securities Exchange late Friday, Ten said Hamish McLennan would replace James Warburton as CEO.

A passer-by stands in front of the News Corp. building in New York in a file photo from June 28, 2012. Mr. McLennan’s curriculum vitae has raised eyebrows, including those of CLSA analyst Digby Gilmour, given that Mr. McLennan was a senior News Corp. executive until Friday. He is also chairman of online real estate classifieds operator REA Group Ltd. REA.AU +1.52%, which is majority owned by News Corp.’s Australian unit News Ltd.

“Ten chairman and shareholder Lachlan Murdoch is also a News Corp. director, confirming our view that News Corp. has a strategic interest in this company,” Mr. Gilmour told clients in a note upgrading Ten to Buy from Underperform. He also raised his price target on Ten to 51 cents a share from 27 cents a share, or 73% above current levels.

“While Ten’s earnings outlook remains dire, we see an increased chance of take-out ahead of News Corp.’s demerger in June 2013,” he added.

The stock last traded at 29.5 cents a share, giving it a market value of 763 million Australian dollars (US$785.5 million).

CLSA says Ten’s “eclectic register”, which includes mining magnate Gina Rinehart and Hancock Prospecting Pty Ltd., means a competitive bid isn’t impossible.

“News has no plans to acquire Ten,” an Australia-based spokesperson for News Ltd. said. News Corp. owns Dow Jones, the owner of The Wall Street Journal.

http://blogs.wsj.com/dealjournalaustralia/2013/02/25/ten-networks-choice-of-ceo-hints-at-news-corp-bid-says-clsa/