Channel Ten has gone into voluntary administration mere days after two billionaire shareholders backed out of guaranteeing more loans for the free-to-air network.
If you're a fan of popular Channel Ten shows like Neighbours, Survivor Australia, The Project, Masterchef, Offspring , The Bachelor and The Simpsons, you're probably wondering where this leaves viewers. Here's everything you need to know.
What is voluntary administration?
Voluntary administration is when an external administrator is called into a company that is experiencing cash flow issues and having serious trouble with paying off its debts. The administrator will then look at the company's assets and assess the business to determine the best course of action. The administration process usually takes around a month.
Why is this happening?
Earlier in the week, Channel Ten informed the ASX that two key shareholders - Illyria Pty Limited and Birketu Pty Limited - would not be extending or increasing their support to the network. This follows the company posting a loss of $232.19 million in April.
The network's current credit facility of $200 million with the Commonwealth Bank expires on December 23. The company was seeking to replace this with a new $250 million loan, but Illyria and Birketu declined to renew their guarantees.
The loss of these guarantees essentially left Ten with no choice but to appoint KordaMentha as administrators. KordaMentha will now attempt to secure new financing and will also explore a potential sale of the network.
Does this mean Channel Ten is going out of business?
No. All your favourite Channel Ten shows are safe. (For now.)
The aim of this whole process is to give companies some breathing room to restructure and recover without having to deal with debt collectors knocking on the door. While the administrators do their thing, Channel Ten expects programming to run as normal.
“During this period, the Administrators intend to continue operations as much as possible on a business as usual basis,” the network said in a statement.
According to a B&T editorial , being forced into the hands of receivers could even work in the network's favour. If nothing else, it would give Ten an opportunity to rid itself of costly broadcasting contracts with CBS and 20th Century Fox.
These contracts - for lacklustre shows like Madam Secretary, NCIS and Homeland - are worth a reported $150 million a year. (The aforementioned B&T op ed is well worth a read - it predicts that News Corp might step in and acquire the network. You can find it at the link above.)
Even if the above is true, voluntary administration obviously isn't a sign of a healthy business - the move effectively puts Network Ten on life support. We'll be updating the story as it progresses.