Ten tie-up with Fairfax back in frame as Rinehart exits network's board

Ten tie-up with Fairfax back in frame as Rinehart exits network's board

Davidson, Darren
The Australian
04 Nov 2014

MINING magnate Gina Rinehart has resigned from the board of the Ten Network, igniting fresh speculation about the future of the media company.
The move comes after The Australian revealed Ten held had high-level merger talks with Fairfax Media about a billion-dollar merger early last month, uniting Mrs Rinehart's two media investments.
While it is understood the discussions are no guarantee that a deal will happen, Mrs Rinehart believes a combination of the free-to-air network and newspaper publisher will create the scale needed to compete in a disrupted media sector challenged by overseas entrants and audience fragmentation.
Mrs Rinehart is Fairfax's largest shareholder, owning 14.99 per cent of the newspaper publisher. She also owns 10 per cent of Ten.
To overcome cross-media ownership and concentration laws, Fairfax is involved in ongoing talks with advertising baron John Singleton about offloading its radio business to him.
But any merger with Ten would need to acquire the support of three key shareholders who have guaranteed a $200 million loan to the network: News Corp co-chairman Lachlan Murdoch, Crown Resorts chairman James Packer and WIN Corporation owner Bruce Gordon. Mrs Rinehart declined the opportunity to act as a guarantor.
A sharp loss in market share and a sliding share price has seen Ten linked with a raft of potential suitors in recent months, including private equity.
Pay-TV operator Foxtel, which is half-owned by News Corp Australia, publisher of The Australian, has considered taking a substantial stake in Ten.
Any such move would be consistent with a global trend that has seen pay-TV and cable operators consolidate with FTA television assets.
MTV owner Viacom purchased British FTA broadcaster Channel 5 this year, and US media mogul John Malone's cable operator Liberty Global acquired a stake in British broadcaster ITV.
Shares in Ten were flat at 22c yesterday as the wider sharemarket lost 0.36 per cent.
Despite the network's ratings and revenue challenges in recent years, the third-placed network recently narrowed a loss and increased its primetime audience share.
FTA television is still considered an attractive media asset, occupying a privileged position in Australia, with anti-siphoning laws ring-fencing premium sport for the networks ahead of Foxtel.
Mrs Rinehart will be replaced on the board of Ten by her alternate director John Klepec.
The chief development officer of Mrs Rinehart's privately held Hancock Prospecting has been a long-term adviser on her $73m investment in the broadcaster, and also plays an active role in the $200m Fairfax investment.
The move will allow Mrs Rinehart to focus on the construction of the $11.43 billion Roy Hill iron ore project, which is due to start exporting in September next year.
Mr Klepec had increasingly attended Ten board meetings on Mrs Rinehart's behalf due to her expanding responsibilities with Hancock.
In a statement to the stockmarket, Mrs Rinehart said she enjoyed working with the management of Ten and wished the board and its staff all the best.
Ten executive chairman and managing director Hamish McLennan thanked Mrs Rinehart for her contribution and support as a director of the company since December 2010."It has been a very great pleasure working with Mrs Rinehart and I have appreciated her commitment and our discussions," he said. "I look forward to her ongoing involvement."