Australian TV network under threat

Australia's Nine Network on brink of collapse

The Nine Network is facing the prospect of financial collapse if two groups of lenders, together owed more than AU$3.2 billion, fail to reach a deal which avoids pushing the Australian television icon into administration.

3News,

26 April, 2012

Nine faces the possibility of having to call in the receivers despite this year delivering its best ratings performance in a decade, the Sydney Morning Herald reports.

Nine’s strength lies in the fact that it carries one of the only three commercial broadcast licenses which exist in Australia, granting access to the free-to-air television market.

Even in the midst of an industry-wide downturn, the network is still on track to report underlying earnings of around AU$250 million for the last financial year.

But it’s struggling under an AU$4 billion debt burden that was loaded onto it when it was acquired by current owner CVC Asia Pacific.

And a group of senior lenders, led by US investment funds Oaktree Capital and Apollo Global Management, are now in a stand-off with a second group of junior lenders, led by Goldman Sachs, over how to resolve the situation.

At stake are a series of Nine’s major contracts, including the television rights to the NRL – signed with Fox Sports for AU$1.025 billion. Nine also has an AU$300 million Cricket Australia contract and an output deal with Warner Bros for programs like The Big Bang Theory and The Mentalist­ – worth AU$500 million.

Nine’s parent company Nine Entertainment – in turn owned by CVC Asia Pacific – has already sold another subsidiary, ACP Magazines, to German publisher Bauer. The ACP stable included titles The Australian Women’s Weekly and TV Week.

However unless its lenders are willing to do a deal, Nine's directors - including network boss David Gygnell - may be forced to call in administrators.