Investors sold down the Ten Network again today, the shares dropping 6c to $2.88 ahead of the release of third quarter profit figures and in a continuing reaction to the failed sale by its Canadian parent, CanWest Global.
That selling is probably short-sighted because Ten is still in play, only the dynamics of the ownership has changed and it has changed for the better.
It may be the wallflower compared with Nine and Seven but in contrast to Nine at least, it has the great advantage of a stable management that understands the TV industry.
CanWest will own 56% and any bid will not be for all of the company, creating the possibility it may sell its stake and leave the minorities stuck. The current Ten management and board forced CanWest to include the requirement that an equivalent offer be made to the minorities in its sell off proposal.
Management of Ten won’t change. CanWest already swings the biggest stick on the board and CEO Grant Blackley was appointed by the entire board. Apart from chairman, Nick Falloon, one of the three CanWest reps on the board, Peter Viner, is a former Ten CEO and extremely well versed in the way the network does things.
Not cheaply, but low cost. It’s something Nine, now in the process of downsizing, can only aspire to.
Ten has a 29+% share of ratings but its share of revenue is running around 30%, and its profit margins are around 34%, give or take a percent or two.
That remains the key to the network’s success.
Its ratings this calendar year are a bit lower than in the first half of 2006 but that’s due mainly to the absence of the high rating Thank God You’re Here from its schedule so far this year.
It’s due to return in about a month’s time. Production is about to start on the third series in Melbourne. It was averaging 1.8 million every Wednesday night in 2006 and was the surprise hit of the year.
Big Brother, on the other hand, is not performing as well as last year and The Biggest Loser, while doing well, was down on its first season in the first half of 2006.
But Ten’s earnings this year will be higher than in 2006 as it recovers from the terrible second and third quarters of that year.