Ten Network Holdings Ltd., the broadcaster that said in April it was at risk of going out of business, will sell a 15 percent stake to Australia’s biggest cable TV company as part of a A$154 million ($119 million) capital raising.
Foxtel, jointly owned by News Corp. and Telstra Corp., will pay 15 Australian cents a share for the A$77 million stake, 43 percent lower than Ten’s closing price Friday. Existing shareholders will be allowed to buy shares up to the same value at the same price, Sydney-based Ten said in a regulatory statement Monday.
Ten, whose shareholders include billionaires James Packer, Gina Rinehart and Lachlan Murdoch, has struggled to keep viewers from switching to rivals as its share of advertising revenue slumped to about 20 percent. It’ll spend the money from the raising on reducing debt and allow a Foxtel representative to join its board.
“The problem is, they’ve got no money,” Evan Lucas, a market strategist at IG Ltd., said by phone from Melbourne. “Yes, their viewership has been picking up since the start of the year but that doesn’t necessarily translate into revenue. Advertising dollars are hard to come by now.”
Ten shares fell 1.9 percent to 26 Australian cents in Sydney. The stock has gained 16 percent this year compared with a 2.4 percent rise in the benchmark S&P/ASX 200 index.
Ten will also take a 25 percent stake in Multi Channel Network, an advertising joint venture between Foxtel and News Corp.-owned Fox Sports, and get a two-year option to become a 10 percent shareholder in online streaming service Presto, jointly owned by Foxtel and Seven West Media Ltd.
The effect of the deal on the market for sporting rights, and the degree of News Corp.’s effective control of Ten, would be issues worth examining, according to Australia’s antitrust regulator.
The deal “does raise a range of issues and we’ll be having a look at it,” Rod Sims, chairman of the Australian Competition & Consumer Commission, said by phone. No decision was imminent, he said.
Australia’s media regulations state that a person or company exercises control of another company if it owns more than 15 percent. News Corp. co-chairman Lachlan Murdoch holds a 9 percent stake in Ten alongside the 15 percent that Foxtel plans to buy.