Independent Experts Report due today..., page-8

Challenging values from expert report into Ten


The KPMG report into Ten is set to be publicly released this afternoon

• The Australian
• 12:00AM October 9, 2017
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• DANA MCCAULEY
  
  Media writer
  Sydney
  @Dana_Adele
  

Ten’s administrators could face a fresh legal challenge with the release of a key report expected as early as today that details the valuation of the company’s shares.
The report by KPMG, which administrators KordaMentha used to advise on the sale of the network to US broadcaster CBS, is set to be publicly released this afternoon ahead of an October 10 court deadline.
Lawyers for Ten’s biggest shareholders Bruce Gordon and Lachlan Murdoch’s interests will examine the financial analysis used for the broadcaster, which could put them on course for a legal challenge to the transfer of Ten’s shares to CBS.
Crucial to any such action would be the value placed on Ten, with the pair understood to be preparing their own independent expert’s report that would give the company a positive shareholder valuation.
The KPMG report will state the company has a negative net worth — allowing the court to approve the deal under Section 444GA of the Corporations Act, which requires takeovers to avoid unfairly prejudicing shareholders.
For Mr Gordon and Mr Murdoch to block the deal, they will need to persuade the court otherwise. They, along with any other interested parties, have until October 13 to challenge the transfer, giving them three days to analyse the KPMG report.
Key details of the report will include Ten’s output contracts to CBS and Fox — which include so-called tail obligations, requiring the network to keep paying the bills while the program is still running in the US — and the income generated by its programs.
Correspondence previously tendered to the court showed that Mr Murdoch and Mr Gordon, through their respective companies Illyria and Birketu, had expressed reservations to Ten’s administrators about their access to information on the sale process. Ten’s creditors last month voted in favour of the CBS takeover, which included the acquisition of Ten’s Eleven channel, channel One and digital platform TenPlay.
Analysts are divided on what a CBS-owned Ten could look like. Some predict a move to youth programming, reflective of what happened when CBS sister company Viacom took over Britain’s Channel 5 in 2014. Ten could air local versions of shows like Carpool Karaoke and Lip Sync Battle.
Others say CBS’s cashflow will allow it to ensure Ten retains rights such as Big Bash cricket, develop premium local content and apply for marquee sports rights as they go up for renewal. CBS plans to launch a local version of its All Access streaming service.
The broadcaster has a longstanding relationship with Ten and was a major creditor through its licensing of US programs such as NCIS.
If the takeover goes ahead, competition in the $2.8 billion capital city free-to-air advertising market is expected to intensify, and it may be against CBS’s interests to sell content to Seven and Nine. A transfer of Ten’s shares to CBS must also be approved by the Foreign Investment Review Board. The proposed sale is listed for a directions hearing in the Supreme Court on October 16.