American television giant CBS buying the collapsed Network 10 is unquestionably good for the Australian television industry, according to the boss of pay TV provider Foxtel.
The New York-listed CBS shocked the media industry this week by agreeing to purchase Ten in a deal that would see it take control of its business and assets from administrators and receivers in exchange for repaying $123 million of the collapsed broadcaster’s debt.
Foxtel chief executive Peter Tonagh said CBS already had significant reach into Australia with content deals with Foxtel and others, and was destined to become a major player.
“The one thing I know having spoken to the CBS team is they don’t see this as short-term investment to flip the business,” Mr Tonagh said at a lunch in Melbourne on Wednesday.
“They see it as a long-term investment to build the business. That can only be good for the industry.”
Foxtel owned a 14 per cent stake in Ten which it paid $77 million for in 2015, and like other shareholders, will see that investment vanish under the CBS deal.
“We’re not happy about that, but there’s nothing we can do about that,” Mr Tonagh said.
Ten and Foxtel jointly own the ad-selling company Multi Channel Network (MCN), chaired by Mr Tonagh, who said Foxtel and CBS had not yet discussed the ad group’s future.
CBS has said it will launch its own streaming video on demand service All Access in Australia, adding to an increasingly crowded market populated by Foxtel Now, Netflix and Stan.
Some of CBS’s original programming has already been sold to other streaming services: for example it’s rebooted Star Trek has been sold to Netflix and Stan (which is owned by BusinessDay publisher Fairfax Media, and Nine Network) has the rights to CBS’s premium Showtime content, including shows such as Billions and Twin Peaks.
“There will be more and more of these services… [and] ultimately Australian consumers won’t want to have lots and lots of them,” Mr Tonagh said.
“I think they’ll want to have an aggregator that does a lot of work for them. Our role is as the aggregator.”
CBS will still need convince a majority of Ten’s creditors by value and by number to vote in favour of the deal, and will need approval by the Foreign Investment Review Board to take over the network.
Foxtel meanwhile is moving towards its own ownership overhaul, with a merger in the works between the pay TV provider – which is 80 per cent owned by Telstra and 20 per cent owned by News Corp – and the News Corp owned Fox Sports network.
Though it has to pass some regulatory hurdles, Mr Tonagh said he hoped and expected the merger would go through as it would strengthen both companies balance sheets.
“Together the whole will be much greater than the sum of the parts, and in a disruptive environment having that strength is an important factor to consider,” he said.
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