CBS’s dramatic and surprising takeover of Network Ten has more episodes to come, with the American giant needing to convince creditors, courts and a federal regulator that its bid is the best option for the company.
New York-listed broadcaster CBS Corporation is set to take full control of the commercial television station from administrators KordaMentha and receivers PPB Advisory in exchange for repaying $123 million of Ten’s debt, in a deal that sees banks repaid and billionaires compensated, but leaves nothing to shareholders.
The deal also means Lachlan Murdoch and Bruce Gordon have failed in their attempt to buy the network despite receiving regulatory approval last week.
Administrators will present a deed of company arrangement to creditors later this week with details about the offer.
However, the takeover of ‘s most beleaguered commercial station by America’s number one network is far from done and dusted. It still requires a majority of Ten’s creditors by value and a majority of creditors in number to vote in favour. It also requires approval by the Foreign Investment Review Board and a court’s permission to transfer all the shares from shareholders to CBS.
If given the all-clear, CBS Corporation will refinance Ten’s secured loans and pay guarantor fees of about $11 million each to Mr Packer, Mr Murdoch and Mr Gordon, according to KordaMentha.
Leslie Moonves, chairman and chief executive of CBS Corporation, said “Network Ten is a prime broadcasting asset with over half a century of experience and brand equity in .”
“We have been able to acquire it at a valuation that gives us confidence we will grow this asset by applying our programming expertise in a market with which we are already familiar.”
While it is not yet known how Ten’s programming could change, government-enforced quotas will ensure that n content is not reduced.
CBS will also launch “CBS All Access” in , its subscription video-on-demand service that includes entertainment and sports. Some of its marquee original programming – such as a rebooted Star Trek series – has already been sold to other streaming services in such as Netflix.
Ten’s chief executive Paul Anderson said CBS and Ten have had a strong relationship for a number of years.
“We are very excited about further developing that relationship with CBS as an owner and strength that they will provide to the company at this critical time,” Mr Anderson said.
CBS is the biggest creditor by far, claiming to be owed $843 million for programming rights.
Secured loans include at least $98 million to Commonwealth Bank (CBA), $841,000 to Westpac and $640,000 to ANZ Bank, according to a list of creditors.
The total cost of secured loans and guarantor fees is about $123 million and CBS will also provide an unknown amount of “immediate financial support to ensure continuity of operations” at Ten.
Ten’s creditors committee includes: three employee representatives; six content suppliers including Cricket , EndemolShine (which produces MasterChef), and FremantleMedia, which produces Neighbours.
Ten jointly owns ad-selling company Multi Channel Network (MCN) with Foxtel (which is half-owned by News Corp of which Mr Murdoch is co-chairman), which owns 14 per cent of Ten. While Foxtel will lose the shares it paid $77 million for in 2015, it is unclear what will happen to MCN if CBS takes control of Ten.
A Foxtel spokesman said: “We have an excellent relationship with CBS and look forward to working with them in the future. Beyond that we cannot comment until further details are known.”
Ten has been up for sale since July following voluntary administration in June, after Mr Gordon, Mr Murdoch and Mr Packer said they would not guarantee any future debts.
Mr Murdoch and Mr Gordon then submitted a takeover offer, which received competition watchdog approval last week, but would have required a complex ownership structure to fit within media ownership laws.
Meanwhile the Prime Minister said it would be “fine” if CBS takes over the commercial network, but said the transaction was proof ‘s media laws need to change.
“This is about ensuring the viability and sustainability of the entire media sector,” Mr Turnbull said of legislation that has stalled in the Senate.
“We need to have ownership laws that enable the industry to respond competitively to the threat from the internet … So all we’re seeking to do is to have, bring, drag those media ownership laws into the 21st century.”
Meanwhile, Labor’s communications spokeswoman said CBS’s move was proof of “media diversity safeguards in action”. Labor opposes scrapping the ownership restrictions that stopped Mr Murdoch and Mr Gordon buying Ten outright.
“The acquisition is good news for the provision of news and current affairs and the public interest in maintaining a diversity of voices in the n media landscape,” Labor’s Michelle Rowland said.