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Last throw of the dice for Ten?

We could see the demise of one of our free-to-air television stations, if the latest move to fix Ten Network Holdings’ (ASX: TEN) many issues doesn’t work.

The struggling free-to-air (FTA) broadcaster is currently in a trading halt, as it prepares to go cap in hand to the market, for money to fix its balance sheet. According to the Australian Financial Review (AFR), shares will be issued at a massive discount to the last traded price of 32.5 cents. The AFR expects shares to be sold at just 20 cents.

Related: The end of TV as we know it

The company raised $200 million in June to pay down debt and give it more flexibility to deal with an uncertain market. 43% of the company is shared between billionaires Gina Rinehart, James Packer, and Lachlan Murdoch, and they all picked up their allocations under the share offer then.

Ten has struggled with all of its big hopes this year – its drama/reality show The Shire not doing as well as hoped, and Everybody Dance Now axed due to poor ratings. Television is a business in which success begets success – popular programs provide a better ‘lead in’ to other shows, and a strong news program can set up the night’s viewing. Breakfast is also seen as a key timeslot, but unfortunately Ten has struggled in both areas recently, notably cancelling its Breakfast program, which aired its last episode on 30th November.

These days, Ten’s television stations run fourth in the ratings race, behind Seven West Media (ASX: SWM) and Seven Group Holdings’ (ASX: SVW) Seven Network, Nine Entertainment’s Channel 9 and even the government owned ABC.

So not only is Ten lagging behind its peers, but free-to-air as a sector is under siege from internet-TV, with viewers choosing to sign up to TV subscription services, or Telstra Limited (ASX: TLS) and News Corporation’s (ASX: NWS) Pay-TV service, Foxtel. Both options allow viewers to watch the programs they want, when they want, rather than when free-to-air programming dictates.

The Foolish bottom line

This may be the last time Ten’s billionaire shareholders might be willing to put their hands in their pockets to keep the broadcaster alive. They may even decline this time, which could have drastic consequences for Ten and its shareholders.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.  The Motley Fool ’s purpose is to help the world invest, better.  Take Stock  is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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