Neighbors. Everybody needs good neighbors. And it looks like the beleaguered Ten Network may have found one in the form of Foxtel, the Australian pay-TV operator.
A tie-up between Ten - a free-to-air broadcaster known for shows such as Neighbours and this year's I'm A Celebrity, Get Me Out Of Here - has been in the wings for some time. Expectations were high that some sort of deal would be announced at Ten's half-yearly result in late April. But it was not to be, and Ten instead warned on its ability to continue as a going concern if were to suffer an unexpected drop in advertising revenues.
Foxtel, which is a 50-50 joint venture between Telstra and News Corp Australia (the subsidiary of Rupert Murdoch's News Corporation) has been patient. Ten is conducting a $154 million Australian dollar (A$) capital raising, with new shares issued at A$0.15 - a steep 43.3 per cent discount to Friday's close of A$0.265. Foxtel will tip in A$77 million, making it a 15 per cent shareholder in Ten, while existing shareholders will be tapped for the remaining A$77 million at a price of A$0.15 per new share.
The money will be used to "reduce debt and provide additional financial flexibility", Ten said in a statement to the ASX.
Ten is working hard to shore up its advertising presence and, as part of the deal, will become a 24.99 per cent shareholder in Multi Channel Network, the advertising sales JV between Foxtel and Fox Sports. Ten will also have an option for two years to become a 10 per cent shareholder in Presto, an online streaming service.
A management reshuffle will take place, too, with a Foxtel representative joining the Ten board, which will thereafter be reduced in size to six directors.
More from The Financial Times:
Ten executive chairman and chief executive Hamish McLennan said in a statement the Board believes the agreements with Foxtel and MCN will better equip the company to respond to the challenges of the media and advertising landscape.
He added: "By joining forces with MCN, Ten will gain new efficiencies, improved data capability and provide broader integration opportunities for its advertising clients."