CBS Corp, the most watched TV network in the United States, said on Monday it would acquire Ten Network Holdings, its largest customer in Australia, and would launch a streaming service in Australia as well.
Through this deal, the largest creditor of Ten has thwarted a takeover made by a Lachlan Murdoch led consortium that was expected after Ten filed for administration back in June. Murdoch is the co-chairman of News Corp, a big rival of CBS.
CBS CEO and Chairman Leslie Moonves through a prepared statement said that CBS were able to acquire the network at a valuation which gives the company confidence it can grow the asset through applying the expertise in programming it has in a market that it is familiar with already.
CBS is entering a market in Australia where broadcasters, and in particular Ten, are slashing costs as losses grow, with advertisers moving with viewers to different streaming services like Amazon’s Amazon Prime and Netflix.
Ten posted a six-month loss of A$232 million this past April, while rivals Nine Entertainment Co. and Seven West Media swung to losses for the year after writing down assets related to television.
However, the deal with the least viewed commercial network in Australia will buy CBS a good foothold in Australia’s local viewing market online through Tenplay Ten’s digital system, as it looks to capitalize on sales overseas of its top shows.
Neither Ten nor CBS disclosed any details of their deal, but media analysts as well as local media has given Ten a value of between A$200 million and $A250 million equal to between $160 million and $200 million.
Shares of Ten, prior to trading being suspended when the company entered administration, gave it an A$58 million market value.
CBS has benefitted from its gamble to own more shows it broadcasts instead of licensing them from different studios. Global hits like Hawaii Five-O have helped increase revenue for international content licensing from $500 million in 1995 to over $1.5 billion ten years later in 2015.
Filings from the administrator lodged after Ten creditors, which included Murdoch, had pulled their debt guarantee, and showed in July that CBS claimed they were owed $A844 million for licensing shows like CSI and NCIS.
Under this deal, CBS will gain Eleven a digital television channel of which it owns 33% already, along with Tenplay. It also will have the ability to launch its video on demand subscription service known as CBS All Access, through the existing infrastructure of Ten.