Packer grabbed an 18% stake in Ten this month (a 20% chunk would trigger a takeover bid under Aussie corporate law), making him its largest shareholder.
It’s a surprise return to the sector he abandoned two years ago after selling off his family’s Nine Network to grow his casino and gaming assets.
Although neither side is commenting on the meeting, Packer is believed to have pushed Ten toppers Nick Falloon and Grant Blackley for a seat on the board and outlined the concerns he has with the network’s new direction.
Complicating the situation still further, unconfirmed rumors began circulating late last week suggesting News Corp. scion Lachlan Murdoch hopes to join forces with Packer, his longtime friend, by buying a chunk of the broadcaster.
Ten is Australia’s third-ranked network and has been for some years, despite breakout hits like “MasterChef Australia” and quizzer “Talkin’ ‘Bout Your Generation,” along with its foray into free-to-air digital channels.
Aussie media laws changed recently to allow the free webs to launch DTT channels; and while commercial TV rivals Nine and Seven have stuck to what they know best, with subtle tweaks to their main channels and demographic, Ten has been more adventurous. Its first DTT offering is an HD sports channel called One. Its second is a youth-skewed joint venture with CBS called Eleven. As Ten’s main channel was also targeted to a youth, execs tinkered with programming there to appeal to an older demo.
Andrew Anagnostellis, media analyst at Deutsche Bank, thinks this strategy not only spreads the network too thin but comes with a pricetag that is too high — and he wonders whether its largest shareholder will accept that.
“In our view, the incremental costs associated with the new strategy represent a major step up in Ten’s cost base and move Ten’s primary channel from the more differentiated market position it has traditionally occupied,” Anagnostellis says.
“With James Packer now a substantial shareholder, we expect him to agitate for change at Ten to improve earnings, which may involve a change to the company’s risky multichannel strategy.”
Ten announced last week that it’s back in the black, with an annual net profit of $146 million for the 12 months through Aug. 31 on revenues up 12%, thanks to a strong return in the advertising market. But costs were also up a sizable 10% due, in part, to buying pricey sports content for One.
Some speculate Packer will refocus Ten’s main channel on the younger market and stop Eleven from competing for the same eyeballs, as well as change One’s sports focus to save coin and take it out of competition with pay TV platform Foxtel’s Fox Sports, in which he has an interest.
Packer owns a 25% share in Foxtel, a fact that has attracted the attention of the Australian Competition and Consumer Commission. It will probe any conflict of interest but, given his previous ownership of Nine, this is unlikely to be a problem.
Still, there’s a lingering question as to exactly what’s behind this about-face from a man who seemed to be disinterested in the old media that so fascinated his late father, Kerry, who built his media empire on Nine.
Is it really a vote of confidence in free-to-air TV Down Under as James Packer and execs at the other free-to-air networks have indicated?
Or is it merely a high-profile way for the billionaire to declare he’s back, after licking wounds inflicted on his gaming holdings by the global financial crisis over the past couple of years?
Not surprisingly, Ten’s Nick Falloon prefers the more positive approach. “We welcome his interest in our company and his return to the free-to-air industry,” Falloon says.
The mogul’s purchase has already boosted the price of Ten’s stock, so that must please shareholders.