CBS to Pay $162M for Ten Network Holdings

The American mass media corporation, CBS,  is reportedly paying US$162 million, or A$201.1 million, in cash to acquire one of Australia’s major media companies, Ten Network Holdings, according to documents issued on Monday by the embattled Ten’s administrators as the company fends off a court challenge from a rival bidder, a consortium led by Lachlan Murdoch, co-chairman of News Corp.

CBS is a major supplier of programming to Ten and is listed as the company’s largest creditor.

Just last month, CBS, the U.S.’ most-watched television network, said that it acquiesced to acquire the Australian television network, without revealing the acquisition price.

The CBS bid remains subject to a legal challenge and the results of a meeting of creditors.

The financial details of the deal put the total value at A$201.1M, which consists a A$139.1 million payment to secured creditors and A$32 million to a creditor’s trust. A working capital of A$30 million is also included, of which A$3.6 million has already been drawn down.

Ten, the youth-focused broadcaster with a national scope and strong brand became an appealing target after it posted a loss of A$156.8 million, or US$ 118 million, in the year through August 2016, and it had net debt of A$54.5 million as of the end of that month.

Its market capitalization dropped to just A$58 million in June. It was placed in the administration in July after support for a loan guarantee was withdrawn by its Australian backers, namely Lachlan Murdoch, News Corp co-chairman, James Packer, casino mogul, and Bruce Gordon, media tycoon.

In a court case filed last week, Bruce Gordon, Murdoch’s business partner, alleged administrator KordaMentha of failing to give creditors enough information about why the CBS Corp bid was chosen.

To answer, KordaMentha released details of the transaction, including the price tag on cash, and a table showing that most unsecured creditors receive higher payouts under the CBS arrangement.

KordaMentha, in a separate statement, said that, “The CBS proposal was superior to the Birketu and Illyria proposal for creditors generally,” talking about the private companies of Gordon and Murdoch, respectively.

The documents also showed that fellow creditor Twenty-First Century Fox, where Murdoch is also executive chairman, received a slightly higher payout under the Gordon-Murdoch proposal.

Fox had also applied to join the court challenge to the deal and it was slated for hearing on Tuesday and Wednesday, KordaMentha said.

Meanwhile, last Friday at 4:52 PM GMT -4, CBS Corporation traded 1.79%, or 1.08, to $59.42. It opened at $60.24, with a session high of $60.39, and a session low of $58.68. Its market capitalization was 28.25 billion, with a P/E ratio of 16.67, and a dividend yield of 1.21%.

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