Australian pay-TV network Foxtel is to take a 15% stake in ailing free-to-air group Ten Network, following months of negotiation.

Ten will raise some A$154 million through a share offering, with Foxtel buying in some $77 million of the new equity.

In return Ten will become a 24.9% shareholder in Foxtel’s advertising business Multi Channel Network, which will in future handle Ten’s ad sales. Ten will also have a two year option to buy a 10% stake in Foxtel’s subscription VoD service Presto.

Ten’s wealthy shareholders, Gina Rinehart, James Packer and Lachlan Murdoch, intend to subscribe for their entitlements in the fund raising.

There was no indication that Bruce Gordon, currently Ten’s largest shareholder with 15% will take part in the fund raising. Gordon, owner of TV network WIN, has previously opposed proposed deals in favour of his own debt proposal.

Ten’s board will shrink to six members and Foxtel be granted one seat.

“The board believes the agreements with Foxtel and MCN will materially enhance Ten’s business and better equip it to respond to the challenge of the ever changing media and advertising landscape,” Ten executive chairman and chief executive Hamish McLennan said.

Under the ad sales arrangement, which starts immediately, Ten will retain responsibility and control over all strategic functions including pricing and selling strategies and the setting of rate cards. MCN will take charge of all selling activities relating to TV and digital inventory and oversee the employment of sales and support staff.

The deal is binding on the parties, but subject to regulatory approval. The share sale could take place in September.