US media company Time Warner has approached Australian commercial broadcaster Ten about a A$680m (€474.1m/$591.8m) takeover, according to the Australian Financial Review newspaper.
Ten, which is currently said to be close to extending its rights agreement for Australian national team rugby union, has been battling poor ratings and revenues in recent years and is being targeted by a number of potential new investors.
The Financial Review said Time Warner senior vice-president James Burtson sent a letter on October 6 to Ten’s investment banking adviser Citi to “express our interest in pursuing a possible acquisition” of the broadcaster.
The letter to Citi managing directors Tony Osmond and Nick Bagot said Time Warner is prepared to explore an offer of A$0.25 a share for the company, adding the approach was not binding and “only intended to facilitate further discussions with you”. Shares in Ten hit an all-time low of A$0.18 last month, but takeover speculation has seen them rise to A$0.27 today (Tuesday).
The letter said any bid would be made by Time’s cable television division, Turner Broadcasting System, and would require the support of high-profile Ten investors James Packer, chairman of entertainment group Crown; News Corporation co-chairman Lachlan Murdoch, WIN Corporation owner Bruce Gordon and mining magnate Gina Rinehart, who control 40 per cent of the Ten stock.
The Financial Review said US media group Discovery Communications has also teamed up with Australian pay-television operator Foxtel to consider a bid, while private equity firms Providence Equity Partners and Hellman & Friedman, along with hedge fund Anchorage Capital are also considering approaches.
The development comes with Australian pay-television broadcaster Fox Sports reportedly poised to conclude an extension to its rights deal with the Australian Rugby Union in the next fortnight. Under the current deal, which is due to expire in 2016, Fox Sports shows Australian national team games and sublicenses free-to-air rights to Ten – a situation that is set to continue under the new contract.
In April, Ten and Fox Sports agreed two-year extensions to their rights deals for the MotoGP motorcycling championship. The contracts were agreed with MotoGP’s commercial rights-holder Dorna Sports and cover the 2015 and 2016 seasons.