A Turnaround For Ten
Money is streaming back into Australia’s media sector as investors think longer-term again, heartened by signs that the country's declining ad market is bottoming out.
In a reversal of the usual state of affairs, it’s been the equity markets taking the lead, not strategic or private equity investors – a trend vividly demonstrated by CanWest’s A$680 million (US$592 million) sale of its majority stake in Ten Network to a group of institutional buyers.
The sale is the most recent, and perhaps the most encouraging, in a steady stream of equity funding deals for Australian media over the last six months. These initially shored up shaky balance sheets but have increasingly become more growth-oriented to reveal a confident, forward-looking market. A similar story is playing out in many Asian countries too.
Almost all of Australia’s listed media companies have taken advantage of this buoyancy, with the value of Australian media twice what it was since a March low. Only APN (which, like Ten, has been able to raise money of its own) remains mired by the travails of a strategic investor – its largest shareholder, Independent News And Media.
Liberated by equity markets
The Ten deal, which follows a failed attempt to sell to private equity firms two years ago, ends a 17-year relationship between CanWest and Ten Network. It’s great news for executives at the Australian company, who can’t have imagined a worse fate than to be controlled by a strategic investor constrained by debt woes of its own.
Ten had already signaled its market potential, raising A$138 million from equity markets in August. Now it’s master of its own destiny once again - free to pursue a broad range of alternatives that were closed off before, and arguably better capitalized than rivals PBL Media and Seven Media Group, both funded by significant private equity investments.
The future has been cloudy for strategic investors in recent months, content to lick their wounds and steer a short-term course month by month rather than the two-year horizons now favored by equity investors. However, that appears to be changing too, and there could be choice deals in store as they return to the market, including potentially Ten Network itself.
Ten is on course to report A$151 million in full-year ebitda earnings in October, including A$142 million from its TV network. After a tough couple of years where it has seen both ratings and earnings sag, Ten's fundamentals could be about to face scrutiny in a fresh light.
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