Television broadcaster Ten Network Holdings Limited (ASX: TEN) has its fifth CEO in as many years, after Hamish McLennan stepping down from his dual roles of chief executive and chairman.
Non-executive director David Gordon has been appointed as the new chairman, while chief operating officer Paul Anderson has been given the CEO role, but it's unlikely that a change of jockey is going to have much effect on a broken-down horse that has struggled for five years.
It's actually longer than that, with the total net profit earned in the 17 years since 1998 around $50 million. Over the same period shares on issue have risen more than 7-fold and close to $1 billion in extra capital has been raised from shareholders. For shareholders, Ten has been nothing short of a disaster.
Shares in the broadcaster have slipped slightly to 20.7 cents, down 1.2% for the day.
Mr McLennan oversaw the buy-in of pay TV operator Foxtel, with the company taking a 15% stake in Ten. Foxtel will pay Ten up to $77 million at 15 cents a share for the stake.
As part of a series of strategic arrangements, Ten also has the option to become a 10% shareholder in Presto, Foxtel's streaming media service. He was also instrumental in Ten becoming a 24.99% shareholder in Multi Channel Network (MCN), and MCN appointed as the sales representative for Ten's TV and digital advertising sales.
Ten also proposed a renounceable rights issue to Ten shareholders to raise a further $77 million, which combined with Foxtel's payment will be used to reduce debt and give the company financial flexibility. Ten has $92.3 million worth of debt at the end of March 2015.
Mr McLennan said in a statement that the agreements meant his role was complete, but some might disagree. Ten posted a $264 million loss for the six months to March 2014, after taking a one-off hit to its TV licence by $251 million amid falls in television revenue and earnings. That suggests that the company has yet to see an improvement where it counts – on the bottom line.
Ten had just 21.5% of capital city television advertising market, compared to around 40% each for Channels Nine – owned by Nine Entertainment Co Holdings Ltd (ASX: NEC) and Seven – owned by Seven West Media Ltd (ASX: SWM). I've long argued that there's no longer enough room in Australia's free-to-air market for 3 commercial broadcasters, and the third one will always struggle.
Foolish takeaway
About the only thing that can save Ten is the federal government relaxing media ownership rules in Australia, and allowing media companies room to expand and diversify. Allowing News Corp (ASX: NWS) to buy Ten, either through Foxtel – which it jointly owns with Telstra Corporation Ltd (ASX: TLS), or individually would be the most likely path to relative safety.
