American broadcasting giant CBS has increased its bid for the Ten Network, heading off a renewed offer by Australian billionaires Bruce Gordon and Lachlan Murdoch.
TV pioneer Gordon and Twenty-First Century Fox executive chairman Murdoch had offered Ten’s unsecured creditors, excluding CBS, $35 million, or 13.40 cents in the dollar, compared with $32 million, or 12.43 cents, in the original CBS deal preferred by administrators KordaMentha.
However, CBS now says it will pay out $40.58 million to unsecured creditors, according to documents filed by KordaMentha.
Part of the change includes a better payout for Twenty-First Century Fox, which would now get $12 million under the CBS bid instead of $3.42 million.
Ten creditors are due to meet today to consider all offers.
The stakes for the Australian media industry when it comes to Ten’s ownership are significant, especially with media ownership reforms now set to become law. CBS owning Ten would give it a foothold in a large English-language market to help compete with the likes of Netflix as traditional TV companies increasingly compete globally with new entrants.
The ownership of Ten by a News Corp-related company, through Lachlan Murdoch’s interest, would make the free to air offering an attractive addition to News’s suite of assets in Australia.
Gordon yesterday lost a NSW Supreme Court action to stop the CBS bid.
CBS, a key content provider to Ten and one of its biggest creditors, doesn’t get paid out under its offer.
The CBS bid is now valued at more than $216 million, including $139.1 million to repay secured creditors including the Commonwealth Bank.
The network went into voluntary administration in June after Gordon and Murdoch, both significant shareholders, refused to increase or extend a $200 million credit facility past December.
Ten in April posted a loss of $232.19 million for the half year in a tough advertising market. At that time, the company said the current debt facility was drawn down by about $66.2 million.
Earlier in the year analysts described the network as “un-investible” for most investors because of operating losses and funding concerns.
The company had been working to cut the costs of buying content from the major players in the US, including CBS and rival Fox.
CBS already has a close connection with Ten. In 2011, the digital channel, Eleven, was launched as a joint venture with CBS holding a third.
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