U.S. company's bid for ailing broadcaster tops rival proposal by two Australian moguls
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 29, 2017).
SYDNEY -- U.S. media company CBS Corp. plans to acquire Australian broadcaster Ten Network Holdings Ltd., beating out a bid from Australian media moguls Bruce Gordon and Lachlan Murdoch for the company after it went into receivership.
CBS's bid was favored by receivers for Ten Network, one of Australia's three main broadcasters, over a proposal from Messrs. Gordon and Murdoch, who wanted to run the broadcaster as a joint venture, people familiar with the deal said. Mr. Murdoch is co-chairman of News Corp, which owns Wall Street Journal publisher Dow Jones, while Mr. Gordon controls a company that owns broadcasting licenses across Australia.
Financial terms for the purchase weren't disclosed, but analysts said CBS likely got a favorable deal given the Australian broadcaster in June went into voluntary administration, a process similar to bankruptcy in the U.S. CBS, Ten Network's largest unsecured creditor, supplies content to Ten Network and owns a stake in Ten Network's digital-television channel, Eleven.
Aside from boosting its international-distribution footprint, the deal for Ten Network would give Manhattan-based CBS an existing platform to help it roll out its CBS All Access subscription service in Australia, which CBS announced along with the deal. CBS is looking to expand the service in global markets, and this month said it would launch it in Canada in the first half of next year. No date has been set for an Australia launch.
"This acquisition not only presents CBS with considerable broadcasting opportunities in Australia, but also allows for further multiplatform distribution and growth," said Armando Nunez, president and chief executive at CBS Studios International, in a written statement.
Representatives for Messrs. Murdoch and Gordon declined to discuss what next steps the pair might take.
The proposed deal comes as traditional broadcasters face an audience migration to online streaming services such as Netflix, Amazon and others, threatening advertising revenue. For the quarter ended in June, CBS reported better-than-expected earnings as it received a boost from new initiatives such as CBS All Access and the Showtime streaming service.
The timing of the deal is "pretty savvy" given Ten Network's current predicament, said Martin Fowler, a partner at money manager Pitcher Partners Sydney Wealth Management, which has avoided Australian media stocks given the challenges facing the industry, including hefty government-license fees in the past.
Australia is a relatively small market, but would be attractive for a global competitor such as CBS because it is one where consumers are willing to pay for content, said Jun Bei Liu, deputy portfolio manager at Tribeca Investment Partners in Sydney.
The deal still needs to win approval from Ten Network creditors, as well as from Australia's Foreign Investment Review Board.
On Monday, Australian Prime Minister Malcolm Turnbull voiced support for the CBS transaction. A deal offering financial stability to the Australian company "would be in the interests of the network, its employees and, of course, its viewers," Mr. Turnbull said of the CBS offer.
--Rob Taylor in Canberra contributed to this article.
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(END) Dow Jones Newswires
August 29, 2017 02:47 ET (06:47 GMT)