After having lost $231.2 million in the half-year ending in February 2017, Ten Network’s hike back to financial viability will be equivalent to climbing the Himalayas in Alexander McQueen Armadillo shoes.
Ten needs to take baby steps and set both short and long-term checkpoints if they are to redeem themselves from this extreme and public blunder. It calls for a complete overhaul of all structure or lack thereof currently in place; and the need for cut throat renegotiation on contracts and suppliers.
In the long term, Ten will need to readjusts to stay afloat with the falling television advertising industry in general. As we all know, free to air television is taking a hit, just as print did; due to the fierce emergence of a completely digitally inclined society. Lachlan Murdoch and his minions are required to construct a plan for Ten to purchase content cheaper and more aligned to new age viewing. This means they are currently desperately trying to renegotiate domestic contracts and generate new ideas to capitalise on.
How to resurrect Network Ten
According to The Conversation; entering voluntary administration provides an opportunity to reorganise Ten completely. Changing media ownership laws would undoubtedly make this easier, by allowing some of the major shareholders to take the company private.
Ten should aim to reduce expenses, aiming for annual savings of A$80 million. In a release to the ASX, Ten talks about renegotiating contracts with the studios it buys content off, notably CBS and 20th Century Fox. Ten had already identified these cost reductions, but entering voluntary administration will give the company a stronger bargaining position.
Ten needs to protect and expand its revenues. With television advertising declining, Ten needs to reach more viewers so that it can maximise the revenue from the content it has. Distributing content through more channels, such as realising the full potential of streaming, would enable more efficient use of content and increase the potential audience.
But developing these channels by itself might not be a viable option as Ten has neither the time nor financial resources. This is why it makes sense to tie up with Foxtel, already a major shareholder and a big player online.
A common theme to these strategies is that Ten needs to compete more effectively for content and advertising revenues. This means that regulatory constraints must be removed if it is to fight for long-term financial sustainability.
Lachlan Murdoch pictured above.