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Big backers lament Ten's woes, but who's running the show?

A very astute professional funds manager quipped this week that investing in a company whose shareholders include a bunch of billionaires is a recipe for disaster because all of them can afford to lose money.

His theory looks right on the mark if Ten Network Holdings is anything to go by.

It is more than a year since Lachlan Murdoch and James Packer took a combined stake of almost 20 per cent in Ten Network. Gina Rinehart followed them some months later.

Their investment has been a disaster. The combined losses on the Ten stake of these three is estimated to be more than $350 million over the past two years.

Yesterday the directors - who no longer include Packer who retains his holding but has resigned from the board - had to stand before the other shareholders and explain what went wrong.

The Ten board was damning with faint praise for its chief executive, James Warburton, in what was a fairly frank assessment of the network's performance over the past year.

Execution was a problem, ratings are abysmal, the advertising market is soft for all the networks but worse for Ten, and a cost-cutting program has been limp.

But it left lingering questions about where the finger of blame should be pointing for the dismal and worsening ratings and revenue performance, particularly since August.

Maybe Warburton's talents don't match the hype that surrounded him last year when Murdoch executed a high-profile kidnapping from the Seven Network.

The aggressive court case launched by Seven against Warburton elevated his status to a level that few could live up to.

Having said that, there is a very blurry sense of who is actually running the show at Ten. Is it the high-profile board headed by Murdoch and which includes mining magnate Rinehart, regional TV operator Bruce Gordon and hamburger king Jack Cowin?

Packer and the above mentioned multi-millionaires or billionaires have major investments in this company - between them about half the shares on issue.

One gets the sense that Murdoch still has a firm hand on the rudder.

"The board has taken additional steps to secure and build our business, including further reducing costs while improving our programming schedule," he said.

In most companies reducing costs and dealing with operational matters such as product is a management job not a board role.

The board has also asked the management to further reduce the cost base of the network since August, which suggests the job wasn't done properly last time.

Given Warburton has only been in the chief executive's role since March, the previous cost agenda must belong to his predecessor, Lachlan Murdoch.

The board, however, has definitely made the decision on how to fix Ten's balance sheet problems: raise another $230 million, on top of the $200 million it raised from shareholders in June. It has needed to price the shares cheaply - 20¢.

It can rest easy that its billionaire shareholders will take up their share entitlements and tip in more money

10 comments

  • It appears anything the Packer and Murdoch sons of touch fails. Would not invest in anything they are a part of.

    Commenter
    Makesense
    Date and time
    December 06, 2012, 1:15PM
    • Maybe it's just Jamie and Lachlan. One Tel anyone?

      Commenter
      simon
      Location
      BNE
      Date and time
      December 06, 2012, 1:23PM
      • Two words, and a dot: One.Tel; or "The Adventures of Lachy and Jamie Having Fun With Daddy's Money Part II".

        Commenter
        Jace
        Location
        Sydney
        Date and time
        December 06, 2012, 1:25PM
        • The board should not have interfered and left it to the people within Network that know - feel sorry for James having to wear a mantle of failure on behalf of Lauchy

          Commenter
          Darren
          Location
          Sydney
          Date and time
          December 06, 2012, 1:35PM
          • Yes, young James and Lachlan should have stuck to running telephone businesses... oh wait.... maybe not..

            Commenter
            Kev
            Location
            Sydney
            Date and time
            December 06, 2012, 1:43PM
            • Thanks to the intervention of Lachlan and company channel 10 have spurned their younger viewer demographic by lumping us with angry middle-aged conservatives Andrew Bolt, Paul Henry and even Steve Price (square peg in a round hole) in the otherwise quite watchable The Project.
              The Paul Henry decision (allegedly thanks to the personal intervention of Lachlan) where he's paid a million dollars to front a show no-one watches (literally a rating of zero at one time) seems mindbogglingly stupid. It's not like we have such a shortage of bigots in this country that we need to import some from New Zealand for goodness sakes

              Commenter
              Think Big
              Location
              Sydney
              Date and time
              December 06, 2012, 1:58PM
              • A bunch of billionaires. And none of them self made.

                Commenter
                I can use a slide ruler
                Location
                qld
                Date and time
                December 06, 2012, 2:09PM
                • Both Gina and James are not "self made". They both got their riches from their father. So, honestly, both their track records for running a company they have no knowledge of is bound to be frought with danger.

                  Lachlan, however, is different.

                  Let's not argue that James has a number of casinos but then again, have you ever heard of a casino loosing money?

                  Commenter
                  Mark
                  Location
                  Orange
                  Date and time
                  December 06, 2012, 2:09PM
                  • Lachlan has done well since the One-Tel disaster but this is the first big opportunity to show he is not the captain of the Costia Concordia.

                    Commenter
                    Jezz
                    Date and time
                    December 06, 2012, 2:46PM
                    • Sadly, I'm a TEN shareholder and not looking forward to the share crash next week.
                      As this article is about the high profile billionaires on the register....guess who's NOT taking up the share offer, yep, Ms Fairfax and Ten herself.....Could it be that Rhinehart has had enough of the media investments and is looking to slowly back out....That would be my guess.
                      As a reference to this, see P.5 of the Investor Presentation, where it is stated that 32.8% of major shareholders will support the CR...Specifically it's stated: "Entities associated with Bruce Gordon, Lachlan Murdoch and James Packer".
                      I'm surprised this has not been picked up by the business press.

                      Commenter
                      JIM
                      Location
                      Bayside
                      Date and time
                      December 06, 2012, 3:44PM
                      Comments are now closed




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