Television broadcaster Ten Network has tapped the market to raise $200 million to strengthen its balance sheet and invest in programming but says there is little sign of improvement in the advertising market.
The broadcaster said its television operations continued to struggle in the soft advertising market, with revenue down 12 per cent from the year before.
Ten said there was a lack of forward bookings for the remainder of its fiscal year and that timing of when conditions would improve remained uncertain.
“With the Olympics in July and August (on rival Network Nine), Ten does not expect that its current revenue share in television will improve in the near term,” Ten said.
CBA Institutional Equities analysts Alice Bennett, Nathan Burley and James Xavier said the recovery in the advertising market may be much more muted than what had occurred after previous downturns.
“While this may ultimately prove conservative, we think the impact of the current fragile global economy warrants a level of conservatism,” they said in a research note dated June 5.
Ten chairman Lachlan Murdoch said the capital raising gave Ten flexibility ahead of the $210 million debt facility due to mature in March 2013.
“This capital raising is an important step in the turnaround of Ten,” Mr Murdoch said in a statement on Wednesday.
“Given the uncertain revenue environment and our strategy of investing in programming renewal, the board felt it was important to strengthen our balance sheet at this time.”
“Our focus is now on renewing our content offering to build audience share and revenue,” he said.
The announcement of the rights issue comes two months after chief executive James Warburton reported that profits had slumped 70 per cent and that a host of new shows had been commissioned to help turn around the fortunes of the network.
All four major shareholders, including billionaire mining magnate Gina Rinehart and casino billionaire James Packer, as well as Mr Murdoch and WIN owner Bruce Gordon, had already committed to taking up their full entitlements of new shares.
The offer price of 51 cents was 20 per cent below Ten’s last traded price of 64 cents, and compares with a share price of around $3.50 five years ago.
Existing shareholders can buy three new shares for every eight shares currently held.
The most recent figures from industry body FreeTV Australia showed Ten captured 27.03 per cent of the capital city television advertising market in the six months to December 31, well behind Seven’s 38.1 per cent and 34.87 per cent at Nine.
Ten said its shares would remain in a trading halt until Tuesday, June 12.
Ten said separately that a bidder for its outdoor advertising business EYE Corp was in the advanced stages of due diligence but there was no certainty the transaction would be completed.
