Ten shares up after CEO sacking
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SYDNEY, Feb 25 AAP
February 25 2013, 5:02PM
Investors' hopes of a turnaround at the Ten Network have been boosted amid speculation about a possible News Corporation takeover of the struggling broadcaster.
Analysts believe that closer ties could develop between the pair after the broadcaster appointed senior News Corp executive Hamish McLennan as its new chief executive to replace the sacked James Warburton.
Ten chairman Lachlan Murdoch also sits on the News Corp board and is the son of News Corp chairman Rupert Murdoch.
Ten's shares leapt almost seven per cent on Monday as investors cheered the leadership change Ten made late last Friday.
Citi analyst Justin Diddams said the benefits of any potential union between News - which owns several newspapers and half of pay TV outfit Foxtel in Australia - and Ten could include cross-platform advertising deals, content sharing and cost savings.
"For Ten, we'd welcome the prospect of more interaction with News Corp (with or without a deal)," Mr Diddams said in a client note.
CLSA Australia was also bullish on the prospects for Ten, upgrading its recommendation for Ten to buy despite a "dire" earnings outlook.
"We see an increased chance of take-out by News Corp and given Ten's eclectic register a competitive bid scenario is not impossible," analyst Digby Gilmour said.
Michael Fraser, director of the Communications Law Centre at the University of Technology Sydney, said News Corp was free to buy Ten - should it choose to do so - under existing media ownership rules.
Currently, the rules prevent a company from owning more than two out of three media platforms - newspapers, free-to-air television, or radio - in a given market.
However, Prof Fraser said a possible change by the federal government to a "two out of four" ownership rule could prevent any News Corp bid.
Ten had a horror year in 2012, as it cut 100 newsroom jobs, undertook two capital raisings and had a number of new shows that failed to fire.
The executive changes continued on Monday, with the departure of chief marketing officer Tony McMaster.
But investors welcomed the arrival of Mr McLennan, pushing Ten's shares up two cents to 31.5 cents.
Mr McLennan demonstrated his confidence in Ten's future, buying 3.13 million shares in Ten.
"As a sign of my enthusiasm for Ten, I have personally invested in the company," he said.
Former Ten co-owner Laurence Freedman said he believed Mr McLennan's appointment would increase News Corp's influence at Ten and was perhaps a first step to News Corp's takeover.
"I don't see that as necessarily a bad thing," Mr Freedman said.
"What Ten needs is a big brother.
However, he expressed reservations about Mr McLennan's appointment as Ten's fifth chief executive in two years, given the News Corp executive was from an advertising background and had not previously run a television network.
"He does not know the local landscape intimately, and has to manage Ten's debt situation, the demographic transformation and the programming dilemma after the company has sacked some very good staff," Mr Freedman said.
By Jordan Chong