Ten shares tank after warning on network’s future
Shares in the Ten Network group lost nearly 20% of their value yesterday when the network warned its future was under threat unless it could reduce program supply costs, negotiate a new $250 million loan facility and get a broadcast licence fee reduction from the federal government.
The market savaged the network after fears were expressed in its half-year results, with the share price dropping from an open 44.5 cents to close at 35 cents, cutting the market capitalisation of the network to just $130m.
Announcing a $232m loss the network said it was hit hard by a $214m impairment charge – the cost of its broadcast licence fee – and was now speaking with the Commonwealth Bank about the future of a $200m loan which falls due in December, its guarantors and its program suppliers about renegotiating deals.
A business model that is based on reducing licence fees and reducing programming costs does not seem like a good model.
What will this mean for local production?
Australian content rules provide an important cultural element to Australian life, but demand for this content and the production of it is almost completely (from a market perspective) created by the government.
If we reduce licence fees further of change content rules it may improve things for ten. I am not sure this is the right way forward.
I think we need to think about the fact that Australia may only be able to support one or two commercial free-to-air networks
@matt
So you’re saying that it’s better that Australia loses a network of free TV stations which millions of people enjoy every day AND thousands of people lose their jobs, rather than the government loosen their regulations and fees to make the business more competitive?
Very strange logic.
So you’re advocating that tax payers should subsidise a loss making business because its commercial decisions have led to it’s failure?
Sorry, but no. Fucked if my taxes are paying for mismanagement of a commercial entity. The government should not forgo a cent of revenue because of a strategic failure by Ten’s management.
The billionaire owners can take a bath on their failed investment decision.
FYI – Viewers don’t disappear, they go elsewhere, and so will the jobs.
Your comment pretty much covers it, Matt.
With an increasingly fragmented market, and with new ways and platforms to view content appearing everyday, the ability to sustain 3 commercial networks in this country isn’t realistic.
Advertisers will only shift more to digital in the future, and by TEN looking at savings in programming, what will attract viewers and advertisers to the network?
@dante
Again, so it’s better to shutdown a local company which pumps hundreds of millions in the economy, that entertains millions every day and employs thousands of people directly and in-directly and give more power to international companies who don’t invest, employ or pay tax locally.
Come on.
The Government needs to apply the same rules to all platforms. You can’t say this TV platform needs to make 200hrs of oz content and then turn a blind eye to the streamers.
@Dan
It’s an nonviable business, end of story. Regardless of entertaining millions everyday (heavily inflated number, by the way).
I’m not sure what you’re suggesting regarding giving more power to international companies?
FTA license fees have been repeatedly relaxed in the past – if other commercial networks are able to make profits then it’s on TEN to deal with why they haven;t been able to, not the government (and in turn, the public).
@dante
All I suggest is that you read a bit more deeply into the matter.