American cable network Discovery Communications has walked away from its offer to buy the main assets of Ten Network Holdings with help from Foxtel. The deal fell through after Discovery and Foxtel rejected the Ten Network board’s alternative offer that it take only a 14.99 percent stake and a board seat at the broadcaster, which has come on some very hard times.
This comes as little surprise as Lazard Asset Management, which owns over 6 percent of Ten Network Holdings, was also opposed to the sale. As a result, any bid the Ten Network Holdings board recommended to shareholders would almost certainly be a failure.
Discovery Communications is the corporation that makes the Discovery channel possible. You have probably heard of the Discovery channel before; every summer, Discovery channel’s Shark Week is a commonly talked-about popular culture event, garnering millions of views during one week during July.
Discovery and Foxtel put in a new offer to buying a majority share of Ten Network Holdings, as this would bypass any opposition to the deal. Instead, the Ten Network Holdings board came back to Foxtel and Discovery with an alternative proposal, in which Discovery and Foxtel would inject capital into the business in exchange for an equity stake of 14.99 percent each with one board of directors representation.
It is believed that the bid was much too low to make a deal remotely possible.
Ten Network Holdings’ ratings show signs of recovery, but they are still believed to be in danger of running out of money within a couple of years if the media company does not receive some sort of cash injection.
In fact, Ten Network Holdings executive chairman Hamish McLennan admitted in November that Citi had been appointed to consider several potential takeover offers, mostly from US-based media and investment companies.
If Ten Network Holdings does not find another investor, the company’s situation will continue to worsen.