Position on Network 10

As we are all aware, Network 10 was placed into Voluntary Administration (VA) on June 14

First and most important thing to realise – It’s not lights out! The station is still running and programmes being broadcast just as it was prior to the VA

What has occurred is that the 3 main backers – Lachlan Murdoch, James Packer and Bruce Gordon – are no longer willing to refinance the current debt facility of $250m

The Administrators will continue to run the Network. EOFY earnings at June 30 are estimated to be a $30m loss. Revenue growth is projected to increase to + $50m in FY18 and on to $80m in FY19 – so operationally, things are OK. The problem is, the underlying debt is just too high.

It is likely the Network will be put up for sale and a buyer found. Who that will be no-one knows, but already Lachlan Murdoch and Bruce Gordon have formed a JV. If not them, the most likely suitor would be News Ltd. If there isn’t a buyer, the other options are that the Directors will be handed control, or in the worst case scenario, the creditors will vote to liquidate the business (extremely unlikely…).

Our position on this is as follows:

We will continue to make bookings with the Network based on the normal criteria we apply to television buying – is the audience there? Does utilising the network represent good buying and cost efficiency? If the answer to these questions is Yes, then we will continue to include the Network as part of our clients FTA Television mix.

If any client prefers us not to include the Network in their television buys, we will accept that request and exclude the network as requested.

We prefer to see a 3rd Network in Australia as part of the FTA television landscape, as it is better for market competition, rate control and promotes flexibility and options for advertisers.

However, it does remain to be seen whether in the changing and dynamic world of broadcast TV, the market can support a 3rd network that at the moment has limited content and not much ability to change that in the short term. It is quite possible that any new owners or market entrant will shape the network in an entirely different way to what we are used to seeing – but that of course is not known at this stage..

If there are any questions or concerns, please contact us at Paykel and we will answer any questions or queries you may have.