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Channel Nine on brink as banks circle

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Colin Kruger and Mark Hawthorne

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The couch potato's guide to Nine's woes

BusinessDay columnist Malcolm Maiden analyses the Nine Network's debt debacle.

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IT WAS once the cornerstone of Kerry Packer's multibillion-dollar fortune, but after two full days of talks among creditors Channel Nine was last night still fighting to stave off bankruptcy.

Sydney played host to a group believed to include Nine's chairman Peter Bush and chief executive David Gyngell.

The private equity owners of the broadcaster were locked in talks to stop the banks from taking charge, seeking breathing room to restructure nearly $4 billion worth of debt.

Glory days … former media mogul Kerry Packer.

Glory days … former media mogul Kerry Packer. Photo: Supplied

Last night the group agreed to approve the $525 million from the sale of its Australian Consolidated Press (ACP) magazines division to Germany's Bauer Media group.

That's enough to buy some time - probably a month - before the next tranche of Nine's debt, estimated at $2.2 billion, is due in February.

''It's one box ticked on a very long list before this is all resolved,'' said a source last night. ''This was a bit of a formality, but at least we are heading down the right path.''

Under the deal some seminal magazine titles, including The Australian Women's Weekly and TV Week, will transfer to German ownership. But it may not be enough to save Nine.

Even after the ratings buzz from the London Olympics, Howzat! and the revival of downmarket Big Brother, the network that for years went by the catchphrase ''Still The One'' is in for the fight of its life.

James Packer severed his father's long-standing links to the broadcaster in 2007 when he sold most of Nine, and its related assets, to private equity fund CVC Asia Pacific, which paid him $1.46 billion cash and took on $3.6 billion in debt.

The private equity firm has since lost the $2 billion it injected into Nine and is attempting to push out its debt repayments among its financiers, who are mostly made up of hedge funds.

Nine's board will be obliged to call in the receivers if it believes there is no prospect of a balance sheet overhaul, and a deal needs to be agreed next month to be in place by February.

The change in ownership of Nine coincided with a savage downturn in advertising, at the same time as free-to-air networks are battling the higher costs of running multiple digital channels. Traditional broadcasters are steadily seeing their audience eroded by pay television and newer forms of internet television, where high-rating shows are being downloaded direct from US studios. Meanwhile, the cost of debt has skyrocketed, putting pressure on Nine's interest payments.

CVC must repay $2.8 billion of debt by February and a further $1 billion a year later, but a breach of its quarterly debt covenants could trigger immediate payment of all the debt, according to Nine's financial accounts.

Nine's heads are believed to have met with representatives of the key creditors - Steven Sher of Goldman Sachs, distressed debt specialists Ken Liang and Edgar Lee representing hedge fund Oaktree, and Asia Pacific head of hedge fund Apollo, Steve Martinez, along with his colleague, Kevin Crowe.

285 comments

  • Well, when you continually treat your audience with complete disrespect this is what will happen. Constantly changing schedules, showing mindless reality shows, and presenting news, current affairs and morning shows that would cause the village idiot to scoff in disgust shows how far 9 has fallen.

    Commenter
    Mawashi
    Date and time
    September 26, 2012, 6:50AM
    • Spot on, unfortunately it's not just 9 that are pathetic. 7 and 10 also have a lot to answer for. Even the ABC has slipped of late.

      Commenter
      Spacks
      Date and time
      September 26, 2012, 8:06AM
    • Exactly. There is no lack of quality programming available, particularly out of the US cable networks. Australian audiences get served dross, however.

      Commenter
      Jonathan
      Location
      Sydney
      Date and time
      September 26, 2012, 8:11AM
    • Sucked in Channel 9. You paid way too much to show league where only 2 states watch the game.

      You delay shows so much from the US and the UK, people just watch them online.

      FYI Survivor has started in the US. How many weeks until you start showing it.

      We are sick of RERUNs of the BigBangTheory and Towand a Half men.

      Turn the lights off now. Your programming sucks.

      Commenter
      Pedro
      Location
      Melbourne
      Date and time
      September 26, 2012, 8:13AM
    • Scheduling chaos, overpaid anchors who don't know the meaning of words, digital equipment operators who can't spell...mindless shows that all look alike. Mind you, the other commercial networks aren't any better.

      I spend more time now watching ABC, SBS and TVS.

      Commenter
      RobW
      Date and time
      September 26, 2012, 8:14AM
    • I'm sick of the right wing propaganda that masquerades as news.
      They need to count internet viewing in ratings thesedays.
      I just use the website viewing programs as i'm never home for the programs i want.
      My boyfriend just watches youtube or torrents the new tv series as he can't wait for 7,9,10 s slow programming schedule

      Commenter
      Allan hawley-jacobs
      Date and time
      September 26, 2012, 8:27AM
    • Exactly. It's time for TV stations to realise they need to act more like movie productions companies and just produce their stuff for immediate consumption on the internet while they show US TV shows within days of airing over there. Not months later. We are no longer a geographically isolated market where you are a big fish in a small pond. The pond is no global and you are the ones that are behind. Consumers now have a world of entertainment at their fingertips. TV stations are the ones that have to adapt.

      Commenter
      Bender
      Date and time
      September 26, 2012, 8:36AM
    • Well who would have thought. Their stale, plastic, stuffy, old fashioned looking presenters and sets are so behind the times they might as well be filiming the Sullivans. I haven't watched that channel since they lost the footy and don't intend to., Everytime I accidentally flick onto that channel and see the same tired blue dominant screen from thirty years ago I cringe. They are living in the past.

      Commenter
      Gawnsky
      Location
      Melb
      Date and time
      September 26, 2012, 8:46AM
    • The sad thing is these television stations, like Gerry Harvey and his refusal to believe GST on overseas transactions is not causing problems in the retail industry, see they are doing no wrong. They no doubt sit there in their boardrooms and wonder why people bit torrent, look at Youtube or buy digital media. I rarely look at main stream commercial channels anymore because of the frequent adverts (and yes I understand you need advertising to pay for the programmes), schedule changes or late running of shows where I give up and move on. I can guarantee, until the last person walking out of Channel 9 shuts the door and turns the light off they still will not open their eyes and understand what led them to this. Mind you, the private equity firm probably has as much to blame. They now doubt strip mined the network and sold all valuable assets (such as Channel 9 Melbourne), leased them back, took the money home to the US and loaded up the network with debt.

      Commenter
      Andrew
      Location
      Elsternwick
      Date and time
      September 26, 2012, 8:55AM
    • Totally agree. Their content has been at least 90% crap for several years now and they're finally starting to pay for it. They need to dump the deadwood (beginning with Eddie Mcguire!!) old boys club and totally relaunch with new blood and some quality programming. Then the people will come back.

      Commenter
      NB
      Date and time
      September 26, 2012, 9:25AM

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