Lachlan Murdoch: We've all felt the pain. Photo: Nic Walker
TEN Network shareholders offered strong support for their embattled board yesterday, despite chairman Lachlan Murdoch admitting that the botched execution of the broadcaster's spring programming was one of the reasons it now needs to conduct a highly dilutive capital raising for the second time in six months.
''Poor execution of our spring programming schedule, compounded by a weak advertising market, has negatively impacted our results,'' Mr Murdoch said at the annual meeting.
He failed to offer any words of support for the man who replaced him as chief executive less than a year ago, James Warburton.
Mr Murdoch said that raising $230 million to pay down debt was ''prudent'' given there was no end in sight to the bleak advertising conditions. He denied it was in response to a possible breach of debt covenants.
Mr Murdoch said the company was paying down debt and reducing costs to put it in the best possible position in an uncertain time.
''We've all felt the pain. The advertising market in this country has deteriorated significantly,'' he said.
''We cannot put our heads in the sand and hope things get better.''
Ten has lost viewers in recent years to Seven, and a resurgent Nine Network. The broadcaster compounded its audience woes with a high-cost tilt at news programming that meant its costs rose last year while viewers and advertising revenues dropped significantly. About 100 news staff are now being made redundant as the company reduces its cost base to match revenues.
Not all of Ten's billionaire backers have committed to participating in the latest capital raising, with Gina Rinehart stating she will make a decision on Friday.
''I think there's room where we can do more, and I certainly hope that we continue to improve the company,'' said Mrs Rinehart who participated in the previous $200 million raising.
''I think that we have to be more prompt on where we could cut costs. Over the last two years, I think we could have done more there,'' she said after the meeting.
Ten did not offer any earnings forecast, but promised to lower its cost base in the current financial year by 6 per cent to $560 million.
Mr Warburton said cost-cutting had not touched programming and money would be spent on areas where the company had a good track record. ''We've never touched the programming budget,'' he said. ''The programming budget has always been left intact because that is the most critical thing - if you start cutting that, then you start cutting your revenue.
''We've got a structure in place for next year, a bit of confidence back. Next year will be the year to bring some confidence back into the schedule.''
All resolutions at the meeting in Sydney passed with little opposition despite proxy advisers and shareholder advocates advising votes against some of the items.
Speaking of the poor performance of the company's shares over the last year, Mr Murdoch reminded investors that the board was ''uniquely'' aligned with investors given that certain directors own a significant share of the company.
The raising, which offers shareholders four shares for every five owned, at 20¢ each, will leave the company with $45 million net cash, but with a $150 million debt note due in 2015. On top of the $200 million capital raising in July, Ten received $98 million from the sale of its outdoor advertising unit Eye Corp in October.
Shares are in a trading halt and last closed at 32.5¢.
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