Lachlan Murdoch and entrepreneur Bruce Gordon have sent Australian commercial broadcaster Ten Network into a tailspin, withdrawing their credit support and prompting the company Tuesday to ask for trading of its shares to be halted for 48 hours.
In a filing to the Australian Stock Exchange, Ten Network Holdings said that it had received letters from Illyria, Murdoch’s private investment company, and Birketu, Gordon’s investment vehicle, withdrawing their backing. It is understood that the pair have provided $151 million (A$200 million) of guarantees.
“That correspondence confirms that those guarantors do not intend to extend or increase their support for the company’s credit facilities beyond the term of the current facility which expires on 23 December 2017. TEN’s board is considering the position of the company in light of the position being taken by Illyria and Birketu and the range of restructuring and refinancing initiatives it has underway,” the company said.
Ten had previously signaled the depth of its problems. At the end of April it said: “There is a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern.” It said it was seeking a borrowing facility of as much as A$250m ($189m) to meet repayment obligations.
In financial circles, Ten has been considered a takeover candidate, with News Corp. widely considered the most likely white knight. But it is not clear whether it would seek to rescue the company as a going concern or first let it file for bankruptcy. At the A$0.16 suspension price, the shares are down 90% from their high of A$1.48 in the past 12 months.
Ten has looked weak compared with broadcast competitors Nine Network and Seven West. But the whole Australian TV sector – free-to-air and pay-TV – is facing huge problems.
They were given something of a reprieve in May when the government agreed to cut the license fees that TV owners must pay. But commercial television in Australia has been hit by declining advertising and viewers who are switching to on-demand services.
Netflix has been hugely successful Down Under. One estimate published this week suggested that it now has more subscribers in Australia than pay-TV leader Foxtel, which counts 2.9 million subscriptions in a country with a population of 24 million. Others eating away at the traditional media hierarchy in Australia are streaming service Stan, Apple, Amazon, and Google.