Conflicting stories in the Fairfax press today about the sale of the Ten Network. The Sydney Morning Herald reports that Canwest has “been forced to relax the conditions” over the possible sale while the Australian Financial Review is claiming there’s a short list of three private equity groups.

The AFR reports the private equity groups as Hellman and Friedman (who were once close to Kerry Packer and Ten executive chairman, Nick Falloon), Merrill Lynch Global and CCMP Capital Asia. No trade buyers were reported, with Ten’s second largest shareholder, Bruce Gordon’s WIN group, not able to get anyone interested in joining it in a bid.

But perhaps the biggest problem for Ten isn’t sale conditions or the price: the daily ratings over the first four weeks of official ratings have hurt Ten’s claim to be back on track after losing its way.

Ten has had a horrible start to 2007 — its summer viewing level was the lowest in five years — and has found it hard to bounce once ratings started. Twice it has finished fourth on Sunday nights, a new black hole.

The Biggest Loser, its marquee program for the 16 to 39 and 18 to 49 target demographics, has not done as well as last year. Only regulars like NCIS and House, and perhaps Law and Order, have done well.

Ten has been the “collateral damage” in the intense ratings battle between Seven and Nine since ratings started a month ago.

 According to Oztam figures Ten’s audience is down in all people where it has a commercial share of 26.6% compared to a share of 27.2% in the first four weeks of 2006.

In the 16 to 39 age group (Ten’s key demographic), its commercial share so far in 2007 ratings was 34.5% (35.8%), in 18 to 49 it was 31.2% (32.4%) and for the broader 25 to 54 group, its share was 28.9% (30.0%.).

These figures are actually worse than they seem because the first four weeks of ratings last year included the Winter Olympics when Seven’s share was boosted and Ten’s were down as a result. So Ten’s 2007 share is being compared to levels that were lower.

Ten’s levels rose as 2006 went on, so unless there’s a sharp improvement in the performance of its programming, it will fall short in 2007. A lot is riding on Thank God You’re Here, Big Brother, Rove on Sunday nights and Australian Idol.

Trade buyers (such as News Ltd and Macquarie media) see these lower-than-expected ratings figures, look at the suggested asking price in the documentation that  Canwest adviser, Citigroup, is passing around, and say “Ten is overvalued”.

The ideal situation would have been to have Ten with a slew of solid programming doing well and setting up a winning look. As it is, the network’s start to the 2007 year has been spotty.

Forget the financial information in the data room, it’s meaningless without onscreen ratings performance and wins. Ad rates (ie revenue) depend on it and nothing else. The ratings and successful programming are the most visible evidence of how the Network is travelling.

So far in 2007 Ten has been spluttering on all cylinders and the harder-nosed media groups know that, and so should the private equity groups, unless they are trying to repeat the disasters of Westfield and Broadcom days at Ten in the 1980s.

A year ago Ten had its worst month for years as the network plunged into the red because of the Commonwealth Games on Nine draining revenue from the TV ad market for around five to six weeks. Ten will look good this month as a result. It’s a pity its on-air performance won’t match that.

Peter Fray

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Peter Fray
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