Ten Network has a hard road back to viability


Peter Wells, University of Technology Sydney

With Ten Network in voluntary administration, efforts are under way to restructure the company. But having lost A$231.2 million in the half-year ending February 2017, it will take a lot to make Ten a viable business.

In the short term, Ten has to focus on reducing costs by renegotiating contracts with its suppliers. Over the long term, Ten has to contend with changing demographics and falling television advertising. The company has to receive more revenue from the content it already has, and the best way to do that may be through a tie-up with Foxtel.

How to make Ten viable

Entering voluntary administration provides an opportunity to reorganise Ten and renegotiate contracts. Changing media ownership laws would doubtless make this easier, by allowing some of the major shareholders to take the company private.

In the short term, Ten should aim to reduce expenses, aiming for annual savings of A$80 million. In a release to the ASX, Ten talks about renegotiating contracts with the studios it buys content off, notably CBS and 20th Century Fox. Ten had already identified these cost reductions, but entering voluntary administration will give the company a stronger bargaining position.

However, these negotiations are just the beginning of content changes. Ten will need to produce content more cheaply and aligned to a changing target demographic. As younger viewers moved away from traditional television, Ten’s programming has suffered. Voluntary administration will give Ten more power to renegotiate contracts with domestic suppliers too.

Longer term, Ten needs to protect and expand its revenues. With television advertising declining, Ten needs to reach more viewers so that it can maximise the revenue from the content it has. Distributing content through more channels, such as realising the full potential of streaming, would enable more efficient use of content and increase the potential audience.

But developing these channels by itself might not be a viable option as Ten has neither time nor financial resources. This is why it makes sense to tie up with Foxtel, already a major shareholder and a big player online.

A common theme to these strategies is that Ten needs to compete more effectively for content and advertising revenues. This means that regulatory constraints must be removed if it is to fight for long-term financial sustainability.

Overcoming financial hurdles

A major contributor to Ten’s recent half-year loss was a one-off impairment charge – the company wrote down A$214.5 million from the value of its television licences.

But, even allowing for this one-off item, there was still a substantial loss and the financial pressures have been building for some time. Much of this pressure stems from a decline in revenues from A$998 million in 2011 to only A$689 million in 2016. The 2016 annual report even notes a structural change in advertising as a risk facing the company.

Over this same period Ten has been working to reduce operating costs, but obviously this has been difficult. The financial reports do not give exact breakdowns of costs, but we do know that content contracts with CBS and 20th Century Fox are substantial and need to be reduced.

If there is one thing we can be certain of, it is that there must be substantial change in the business for Ten to recover.

Further contributing to Ten’s woes are loan facilities that expire in December. This includes borrowing that amounted to A$73.8 million at the end of February and which needs to be repaid in the short term.

Unless Ten can negotiate an extension to its loan facility at the Commonwealth Bank, the solvency of the business becomes doubtful. Failure to get backing for a new loan to replace the current one in December is reportedly one of the reasons Ten decided to go into voluntary administration.

The ConversationPreviously, major shareholders had provided guarantees for Ten’s banking facilities, but this is difficult to justify given the state of the business. Regardless, it would not resolve the underlying issues. For Ten to be viable, it needs to get a handle on costs and reach more viewers with the content it has.

Peter Wells, Professor, Accounting Discipline Group, University of Technology Sydney

This article was originally published on The Conversation. Read the original article.

Ten Network’s problems are history repeating


Marc C-Scott, Victoria University

Reporters at the Ten Network relayed the news of their employer’s voluntary administration, during a staff meeting. The network was looking to refinance to the tune of A$250 million, after its existing finance was due to expire on December 23.

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But Ten’s directors said they were left no choice but to appoint administrators from KordaMentha to try to recapitalise or sell the business. Lachlan Murdoch, who owns a 7.7% share of Ten (via his private investment fund Illyria), and Bruce Gordon, who owns 14.96% (via Birketu), are now teaming up to offer a rescue package to restructure the network, though the details are still to be sorted out.

This will see the two shareholders treated as an association rather than a merged entity to prevent triggering a compulsory acquisition provision or a breach of the existing two-out-of-three cross-media ownership rule.

While this all may appear to be contemporary issues for the company, Ten has faced many hurdles during its lifespan of little over 50 years.

Ten has been in trouble before

The network began in the 1960s, originally named the Independent Television Network, before promptly being renamed the 0-10 Network. The network’s Melbourne-based station (ATV-0) began its official broadcast on August 1 1964, with other metro stations starting the year after.

Ken Inglis argues in his book, Whose ABC?, that Ten struggled during its early establishment and that the Whitlam government made attempts to buy the network to use it as a second channel for the ABC.

But the network debuted popular shows during this time, such as Number 96, and its high ratings pushed the price higher than the government was willing to pay.

Remembering Number 96.

Ten also faced a crisis after Frank Lowy bought the network from Rupert Murdoch. Murdoch was forced to sell due to changes to the media ownership laws in 1987, which prohibited a media company owning both a newspaper and television station in the same city.

Lowy said that “TV was like any other business”, although he quickly found out it was not. Lowy asked Ian Gow, who had previously worked at the Nine Network, to run the network. According to Gow, Lowy had “bought the worst house in the best street and [wanted] to renovate”.

Despite the initiatives Gow implemented, including selling off the Adelaide, Perth and Canberra stations, the network was forced into receivership in September 1990. Communications corporation CanWest Global bought 57.5% of Network Ten from Westpac Bank for A$275 million and then re-established a capital city network in 1995.

During 1999 Ten formed a joint venture with Village Roadshow Limited, Village Ten Online (VTO). Network Ten argued this was a “strategically defensive move” to develop and market content for the next generation. Ten stated in its 1999 annual report that the joint venture planned to produce a series of websites targeted specifically at the under-40s market.

The first major announcement of the venture was Scape.com, which was launched in October 2000. The CEO of Ten Ventures, Peter O’Connell, described Scape as:

An exciting new presence on the Internet, with all the necessary attributes to appeal to increasing numbers of online service users.

But in March of the following year, less than six months from its launch, Village Roadshow and Network Ten released a joint press release stating that Scape had been placed in voluntary administration and ceased operation. Both companies had contributed A$22 million to the joint venture.

Ten’s future

Ten’s future is unclear and this will not only impact the network, but some of its key stakeholders.

This recent announcement will affect Bruce Gordon, who holds a 14.96% share in Ten and also owns WIN Television, in two ways. The first is due to his financial stake in the network, which could expose his investment companies to liability. Secondly, WIN Television is the regional affiliate of Ten. Any changes to Ten or its programming would impact WIN and its regional stations across Australia that rely heavily on Ten’s programming.

Foxtel is another major shareholder that could be affected by any changes made to Ten. Any restructure or sale could impact the recent approach by both Foxel and Ten to partner in programming including GoggleBox, Common Sense, A-League and V8 Supercars. This approach could be used as part of the negotiations for the upcoming Cricket Australia media rights. Ten holds the rights for the Big Bash League and, while it would not like to lose these rights, a partnership with Fox Sports could allow it still to gain access to some games.

The ConversationWhat is clear is that Ten will have to attempt to break the traditional broadcast model and rethink what a television network is in the current media landscape. If it can achieve this it could potentially place the network in a strong position to compete not only with other local television broadcasters, but also with new media players that are stealing their ad revenue and audience share.

Marc C-Scott, Lecturer in Screen Media, Victoria University

This article was originally published on The Conversation. Read the original article.

Chasing the audience: is it over and out for cricket on free to air TV?


Marc C-Scott, Victoria University

How Australians watch cricket on screens in the future could depend on what happens with the Nine Network’s current discussions with Cricket Australia over the 2018-23 media rights. The Conversation

UBS media analyst Eric Choi said the current deal costs Nine about A$100 million a year but generates only A$60 million to A$70 million in gross revenue.

Choi said the network should either ask for access to more content at no additional cost, or step away from its long association with cricket.

The ramifications of Nine’s decision could be broad, impacting not only its potential revenue and viewers, but also participation rates among Aussies playing grassroots cricket.

Cricket’s current standing

The current media rights deal for cricket includes the Nine Network and Network Ten. Nine has the rights to international tests, one-day internationals and T20 international games played in Australia, whereas Ten has the rights to the Big Bash League (BBL).

The BBL has become a crucial cricketing brand, continuing to gain high ratings and listed in Australia’s Top 20 engaging programs for 2016.

The league also has excellent crowd attendance, having recently ranked 9th in the world’s top-attended sports leagues.

Based on the BBL’s success and the increases seen in the new media rights for the Australian Football League (AFL) and National Rugby League (NRL), Cricket Australia will want to see an increase in the bidding for its rights.

This is particularly relevant if Cricket Australia still relies as heavily on these rights as in 2012, when it said the rights accounted for 60%-80% of the total annual income.

But can the media rights continue to increase with the current unstable media landscape?

The current media landscape

According to Arnhem Investment Management, the era of advertising-supported premium sport on Australian television is “drawing to a close”.

The free-to-air (FTA) broadcasters are also currently requesting that the government reduce license fees and reconsider plans to further restrict gambling ads during the broadcast of sports.

Ten has said it expects its revenue to be “above the 1.2% increase” it outlined in February this year. Yet it will still need to undertake a “significant focus” on a corporate cost-cutting program and profitability as a priority.

New stakeholders

With FTA broadcasters under financial pressures, any increase in new rights will require new stakeholders.

Foxtel currently shows international cricket matches played overseas, but does not have local coverage rights. If it could gain local cricket rights, this would further strengthen Foxtel’s sports offering of AFL, NRL, A-league, V8 Supercars, and many international sports.

Australia’s anti-siphoning regulation could prevent Foxtel completely dominating the cricket media rights. But this list is expected to be trimmed further by the government this year, furthering opening up the sports media battleground for pay television in future rights deals.

The future for digital rights

Digital rights will also be a major consideration with the new cricket media rights. While most would be looking at Telstra and Optus, there have been new players in this area who may also wish to place a bid.

Currently Cricket Australia has the Cricket Australia Live app which allows users to pay a subscription (A$30 per year or A$5.99 a day) to gain access to live streaming of games, but the new rights could also see this change.

Optus may continue its affiliation with cricket. It recently become the official mobile media partner of Cricket Australia, and principal sponsor of the Melbourne Stars Big Bash League team. Customers can access cricket content via the Optus Sports app, which also includes Optus’ recently acquired English Premier League.

Twitter has had success with broadcasting the US National Football League (NFL) and the Melbourne cup last year. This year it signed a two-year deal with the US National Lacrosse League. Twitter may consider its interest in a global sport like cricket.

Amazon, which recently launched its Prime Video service in Australia, could also be a contender. This year Amazon won the rights for NFL Thursday night matches. It paid US$50 million for ten games, five times the price paid by Twitter last year. Amazon may look at the cricket as another potential global sport to add to its catalogue.

Another consideration is if Nine or Ten were to obtain the digital rights and use the free and subscription approach that the Seven Network used as part of their Rio Games coverage last year.

The impact on the viewing experience

Can you “slice and dice” too much? This is a question being asked in the US by CBS chief executive Les Moonves with regard to the NFL.

Adding another stakeholder to cricket will impact the viewers’ experience. This year the new AFL media rights created some frustration linked with the way the rights had been negotiated, particularly the digital rights.

Telstra, the digital rights holder, is restricted by its agreement to limit live match videos to a 7-inch screen size. Highlights and replays are available in full-screen size 12 hours after the match ends. (Foxtel, meanwhile, can stream the games full-screen.)

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This change has outraged some fans who paid the A$89 subscription fee for the AFL Live app. Because of the screen size restrictions, Telstra users with a large phone or tablet have a large amount of black space on their screen.

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Some Australians are being creative in working around the restrictions.

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Media coverage and participation

The media rights for sport can be looked at far more broadly than solely the coverage of the game itself.

In the United Kingdom there has been ongoing debate associated with cricket’s coverage. Since the sport moved to pay-TV, there has been a decline in participation levels, which many argued is primarily due to the game no longer being broadcast free to air.

Reports of a Sport England Active People survey show a 32% drop in participation levels in people aged over 16 since coverage of cricket moved to satellite and cable TV.

There are now steps being taken to introduce a new Twenty20 tournament in the UK, built around the success of the Indian Premier League and Australia’s BBL, which had some games live broadcast in the UK during the last season.

This is an interesting case study for Cricket Australia, which only last year announced cricket as “No 1 as the current top participation sport in Australia”.

Any changes to the rights that impact the percentage of Australians with access to the coverage, could also see a decline in participation based on the UK experience.

Marc C-Scott, Lecturer in Screen Media, Victoria University

This article was originally published on The Conversation. Read the original article.

Australia: Malcolm Turnbull on 7.30


It’s about time – indeed past time – that politicians were challenged and taken to task over their refusal to answer questions. My solution – don’t let them back on if they don’t answer the questions asked.

Afghan Authorities Block Lawyer from Visiting Jailed Christian


Second suspect accused of ‘blasphemy’ is government informant, accused says.

ISTANBUL, December 9 (CDN) — A Christian in Afghanistan facing “apostasy” charges punishable by death is still without legal representation after authorities blocked a foreign lawyer’s attempt to visit him in prison, sources said.

A Christian lawyer from the region who requested anonymity travelled to Kabul on behalf of Christian legal rights organization Advocates International two weeks ago to represent 45-year-old Said Musa (alternatively spelled Sayed Mossa). Authorities denied him access to Musa and to his indictment file.

“If a man is not entitled to define his own beliefs, and to change those ideas, under the existing constitutional order of Afghanistan, then how is this government more moral than the Taliban’s?” the lawyer said in an e-mail to Compass.

After several court hearing postponements, Musa appeared before a judge on Nov. 27 without prior notice. Rejecting the case file as deficient, the judge sent it to the attorney general’s office for corrections, according to the lawyer. The lawyer said he has deduced that the file was missing a formal indictment and other “incriminating” evidence.

The legal expert said that according to Afghan law, Musa is entitled to see a copy of the indictment and review the evidence against him, but authorities have denied him both rights. If the prosecutor does not present the court with an indictment within 15 days of arrest, the attorney said, an accused person has the right to be released. Musa has been in jail since May 31.

 

Suspicious Second Suspect

The prosecutor in charge of western Kabul, Din Mohammad Quraishi, said two men, Musa and Ahmad Shah, were accused of conversion to another religion, according to Agence France-Presse. But Musa’s letters from prison and other sources indicate that Shah is a government informant posing as a Christian.

Musa and Shah appeared before the judge on Nov. 27 “shackled and chained” to each other, according to a source who was present. Though Shah, who was also arrested six months ago, has denied he is a Christian, the prosecutor said there was “proof” against him.  

Musa and the other sources claim that Shah is an informant posing as a Christian in order to damage him and other Afghan Christians. They claim that Shah allegedly sent images of Christians worshiping to the country’s most popular broadcaster, Noorin TV, which aired them in May.

The broadcast appeared on an Afghan TV show called “Sarzanin-e-man,” or “My Homeland,” hosted by Nasto Nadiri, 27, an outspoken opponent of the government and a parliamentary hopeful. Noorin TV station is opposed to the government and does what it can to “embarrass” it, a source said.

The broadcast put in motion the events that got Musa arrested, sources said. The hour-long TV show sparked protests throughout the country against Christians and a heated debate in parliament. In early June, the deputy secretary of the Afghan Parliament, Abdul Sattar Khawasi, called for the execution of converts from Islam.

Many converts to Christianity left the country, according to sources, and many were arrested, though the exact number is unknown.

Musa was concerned about the public outcry against Christians and went to his employer, the International Committee of the Red Cross/Red Crescent (ICRC), to request personal leave the morning of May 31. Authorities arrested him after he left the building, and his family could not locate him for nearly two months.

The Christian suffered sexual abuse, beatings, mockery and sleep deprivation because of his faith in Jesus in the first months of his detention. Last month, after quiet diplomatic efforts, authorities transferred him to the Kabul Detention Center in the Governor’s Compound. There have been no reports of mistreatment since he was transferred.

The lawyer who tried to visit him said that all Afghans in the country are assumed to be Muslims, and this assumption is deeply ingrained in the culture. The result is lack of justice for the “deviants,” he said.

“It is the greatest shame on a family, clan and the nation, that someone would consider to leave Islam,” the lawyer told Compass. “I [saw] the face of the attorney general literally darken in distaste when he realized we came to assist this man who committed such a shameful offense. Therefore there are no ‘rights’ Christians can claim.”

The lawyer said that from the perspective of the court, if Musa continues to stand for his faith in Jesus, he will certainly be found guilty of “apostasy,” or leaving Islam.

Though no one knows when a court hearing will take place, monitors expect it could be any day and, as before, could come without warning. Musa is still looking for an Afghan lawyer that will agree to defend him in court.

In his latest letters from prison, Musa asked Christians to continue to pray for him and Afghanistan and “not give up.”

An amputee with a prosthetic leg, Musa worked for the ICRC for 15 years, fitting patients for prosthetic limbs. He stepped on a landmine when serving in the Afghan Army, and his injury required the amputation of his right leg below the knee, according to World Magazine.

Married and the father of six young children, Musa has been a Christian for eight years.

 

Another Christian in Prison

Another Afghan Christian is in prison for his faith, sources said. Shoib Assadullah, 25, was arrested on Oct. 21 for giving a New Testament to a man who reportedly turned him in to authorities.

Assadullah is in a holding jail in a district of Mazar-e-Sharif, in northern Afghanistan. Sources said his family has been unsuccessful at procuring his release despite paying bribes to officials. As in Musa’s case, because of the sensitivity of the charges, no lawyer has agreed to defend him. Assadullah has not reported any mistreatment while in prison.

He has stood before a judge at least once since his arrest. The judge asked him what faith he followed, and Assadullah told him he was a Christian, said a source who requested anonymity.  

Although Assadullah’s family has tolerated his new faith, they are not pleased with it, the source said, and a few days ago his father disowned him. Assadullah became a Christian about five years ago.

“He wants others to know that he is not frightened, and that his faith is strong,” the source told Compass. “He is desperately missing having a Bible.”

Assadullah asked that people pray that Afghan believers would stay strong in their faith, the source said.

Musa and Assadullah are the only known Christian converts from Islam in prison in Afghanistan, and both face probable apostasy charges punishable by death under sharia (Islamic law), which is still applied in the country.

Last month, in its 2010 International Religious Freedom Report, the U.S. State Department reported that respect for religious freedom in Afghanistan diminished in the last year, “particularly for Christian groups and individuals.”

The constitution states that Islam is the “religion of the state” and that “no law can be contrary to the beliefs and provisions of the sacred religion of Islam.” The report stated that conversion from Islam is understood by Islamic clergy, as well as many citizens, to contravene the tenets of Islam.

Nevertheless, the country has signed the UN Universal Declaration of Human Rights stipulating religious freedom, including the freedom to change one’s faith. The nation’s constitution also provides a measure of religious liberties under Article 2, but Article 3 limits the application of all laws if they are contrary to the “beliefs and provisions of the sacred religion of Islam.”

Another source who requested anonymity said the proceedings against Musa and Assadullah typify the intolerance and abhorrence inherent in Islam toward open-mindedness and progress. He said that the only sentence possible would be death, and that if Musa were freed his only recourse would be to leave the country or be killed.

The source voiced exasperation toward the international community and defenders of human rights for not speaking up for the Christians in prison.

“We try as much as we can to push things in order to reveal this unfair situation, knowing that Afghanistan is a signatory of the Human Rights Convention,” he said. “But this serious failure of human rights is more or less accepted as a case ‘so sensitive’ that nobody wants to really fight against.”

According to the state department report, estimates of the size of the Christian community in Afghanistan range from 500 to 8,000.

Report from Compass Direct News