Fairfax media has reported that the Australian Communication and Media Authority (ACMA) would probably not block a takeover of the struggling Ten Network (ASX: TEN) by News Corp (ASX: NWS).
The ACMA is responsible for the regulation of broadcasting, the Internet, radio comunications and telecommunications in Australia. Fairfax reported that ACMA representative Jenifer McNeil told a Senate hearing that any takeover would not necessarily breach rules on media diversity.
A media control rule exists to prevent ownership of commercial TV and radio licenses alongside a newspaper in any one city. A parliamentary committee has also recommended abolition of the reach rule that prevents commercial TV broadcasters from reaching more than 75% of the population.
The Ten Network is chaired by Lachlan Murdoch, who owns roughly 9% of the free-to-air broadcaster and is also a director of News Corp. In fact, four billionaires own the four largest holdings in Ten — the share register includes Murdoch Jr, Gina Rinehart, James Packer and media-mogul Bruce Gordon.
More ordinary long-suffering investors in the network are likely to welcome any further sign that the proposed takeover is genuinely on the agenda. Ten has been hit by falling advertising revenues and an inability to make popular programmes to compete with the Seven Network (ASX: SWM) and the soon-to-float Nine Entertainment (ASX: NEC). Ten has embarked on a much publicised turnaround strategy the fruits of which are yet to appear.
Foolish takeaway
The digital age has changed the game for free-to-air TV broadcasters with the emergence of high-speed broadband and other entertainment mediums fragmenting its market. The major shareholders will no doubt want to see a better return on their own investments, making a push for further change likely.
