Australian broadcaster Ten Network attracts several prospective buyers

Just a month after appointing Citigroup as adviser to meet with potential buyers, beleaguered Australian broadcaster Ten Network Holdings yesterday confirmed that several parties have shown their interests in taking control of the group.

In a filing with the Australian Securities Exchange (ASX), the company said it had received non-binding proposals from a number of parties which, if implemented' could result in change of control of Ten or refinancing of its existing debt facilities.

Although, details of the proposals have not been revealed by Ten, it is speculated that Australian pay TV group Foxtel and US cable operator Discovery are front-runners despite paring their original offer. It is believed that the investment banker has received at least three offers for the television network.

Foxtel and Discovery are widely believed to have offered 23 cents a share for Ten valuing it at A$605 million, slashing their original bid of 26 cents a share by over 11 per cent.

Foxtel, based in New South Wales, is a 50:50 joint venture between media giants Telstra and News Corp Australia, is engaged in cable television and direct satellite and IPTV services, while Silver Spring, Maryland-based Discovery Communications Inc is a global mass media and entertainment company.

Shares of Ten have slid 6.3 per cent yesterday to 22.5 cents amid speculation that potential buyers have pared back their offer.

''Ten urges caution in dealing in its shares on the basis of media speculation about potential transactions,'' the group said in the statement.

Sydney-based Ten Network or known as simply Ten is the country's third-largest free-to-air television broadcaster behind Seven and Nine.

Its assets include three free-to-air television channel Ten, Eleven and One in Australia's five metropolitan markets of Sydney, Melbourne, Brisbane, Adelaide and Perth with affiliates extending their network to cover most of the country.

One of Australia's richest men and Crown Resorts chairman, James Packer and News Corp co-chairman and media mogul Rupert Murdoch's eldest son Lachlan Murdoch together hold 17.9- per cent stake in Ten.

Bruce Gordon, owner of leading Australian media company WIN Corporation, is Ten's largest shareholder with 14.9-per cent stake. Australia's richest woman Gina Rinehart holds around 10-per cent stake in the network.

James Packer and Lachlan Murdoch, known to be keen sellers, may prefer a fairly-priced takeover offer of Ten rather than any proposal to refinance the ailing broadcaster.

Analysts believe that Foxtel could see significant cost synergies at both programming and operational level and better opportunities and negotiating power through combined offering.

The combination of Telstra's large customer base and wireless networks, Foxtel's cable and satellite distribution platforms and Discovery's vast content base would place Ten in a relatively strong position in the challenging broadcast media market.

Other potential bidders are believed to be US private equity firm Anchorage Capital Group and Los Angeles-based investment firm Saban Capital Group.

Media reports last month suggested that US media and entertainment giant Time Warner Inc have offered A$680 million for the takeover of the ailing broadcaster. (See: Time Warner seeks to buy Australian broadcaster Ten Network for $588 mn).

The proposals will be reviewed by an independent committee of Ten's board along with Citigroup advisers.

For the year to end of August, Ten's TV operations made a loss of A$79 million in earnings before interest, tax, depreciation and ammortisation. The company's net debt stood at $85 million.

Ten stressed that ''the proposals are confidential, non-binding and conditional in nature and may or may not result in a transaction.''