Packer play hands Murdoch TV trump
October 21, 2010 Packer on verge of formal Ten takeover
Channel Ten shares jumped after billionaire gambling mogul James Packer's $245 million raid on the network.
JAMES PACKER'S $270 million raid on the Ten Network is part of a wide-ranging plan that, if successful, would have Rupert Murdoch's Sky News broadcast on one of Ten's high-definition services - replacing its dedicated sports channel, One.
Axing Ten's sports channel would get rid of a big competitor for Fox Sports, jointly owned by Rupert Murdoch's News Ltd and Packer.
Until now Sky News has been available only on the pay television outlets Foxtel and its regional equivalent, Austar.
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Under Packer's plan, Sky News would still be screened by Foxtel but would use one of Ten's digital channels as another distribution point and reach a far bigger audience.
And just as importantly for Murdoch it would give him a presence in free-to-air television - and some would argue an opportunity to voice his political agendas on a more mainstream broadcast media.
The advent of multichannelling by the three commercial networks has been placing pressure on pay TV. Foxtel would undoubtedly fight the Packer move.
The second leg to Packer's investment in Ten is designed to cut the broadcaster's costs by abandoning its expensive plan to spend millions of dollars boosting its news service between 6pm and 7pm. This includes installing the news and current affairs veterans George Negus and Chris Masters.
Packer would prefer to see Ten continue to offer its cheap alternative of repeats of programs such as The Simpsons and abandon the costly news and current affairs option - an already overcrowded market .
Cutting Ten's operating costs would be an essential element to seeing Packer make a return on his $270 million.
The theory is elegant enough but its execution would put Packer into battle with the management and board of the Ten Network.
Packer's 18 per cent stake might not be enough to push through his radical changes and he would likely need the support of Bruce Gordon, the owner of the regional broadcaster WIN, who holds 12 per cent of Ten, and Perpetual Investments, which has about 10 per cent.
Either could probably deliver Packer control of the Ten board.
At this stage Packer has no plans to make a full takeover bid for the company which has been experiencing pressure on its cost base and revenue due to competition from new media.
Packer ended his family's association with free-to-air TV two years ago when he sold the last of his stake in Nine Network's parent, PBL Media.
