Nine deal 'a win for the viewers'

Source: The Daily Telegraph

WHILE industry doom-sayers yesterday predicted Nine's new owners would be quick to wield the knife at the already haggard network, its bosses declared the deal would mean one vital thing to TV fans - more money for programming.

Six years ago when CVC bought Nine from James Packer, the programming budget all but arrested and capital expenditure dried up as the network began servicing CVC's massive debt.

Yesterday, with the Willoughby studios falling down around their ears, relieved staff celebrated CEO David Gyngell's success in keeping the receivers from the door.

Senior lenders will own a 95.5 per cent stake in Nine and the Goldman Sachs-led mezzanine lenders, who faced losing the entire $1 billion they had invested, will receive a 4.5 per cent stake valued at about $100 million.

"Nine's back!" Mr Gyngell said. "And back in a huge way with zero debt, which is the best possible news for our stakeholders, Nine's viewers, our clients, our partners and our staff.

"As I've reiterated throughout this process, Nine is a great business with terrific people and outstanding brands."

The jubilant statement was at odds with unsubstantiated industry murmurs claiming Nine still has to find $70 million to $80 million a year to service $1 billion in debt.

The first programming decision for Nine's new executive will be finding money for TV cricket rights, the contract for which is up in March.

Sources claim the deal is close to being finalised, with Nine set to pay slightly more than the previous $300 million contract. Like the network's recently renewed $1 billion rugby league contract, the cricket funds are expected to come from ad revenue.

Industry rivals yesterday said Mr Gyngell's claim that he had just "paid the house off" was wide of the mark.

"The reality is that the banks have just taken the house," one rival said.

"The fact is the company is now much smaller having recently blown off Australia's biggest magazine company.

"There will be no more cross-promotion. Life as they know it has changed forever."

The Nine CEO, for his part, has already indicated there may be a $500 million windfall in 2014 when the Warner Bros programming package from the US autumn is due.

Mr Gyngell has said he will reconsider the value of the expensive output deal which delivers to Nine primetime shows including Two And A Half Men, The Big Bang Theory, and The Mentalist.

Along with the potential sale of Allphones, Ticketek and, possibly more imminently, Channel 8 Darwin, Nine's new owners may also look at selling Nine's Willoughby bunker, valued at about $20 million, if they believe they can make money.

The bloodletting at Nine in the decade since it was the nation's most profitable and highest-rating TV network has penetrated the organisation, with staff also feeling the cuts.

A decade ago the 60 Minutes executive producer earned $900,000 a year. The show's newly appointed EP Tom Malone is believed to earn less than half that sum.

Yesterday Mr Packer moved to quash claims he would buy back into the network that made his family famous, declaring: "I have no interest in buying back into Nine ... and Gyng would probably refuse to work for me."

His father Kerry sold Nine to Alan Bond in 1987 for $1 billion only to rebuy it three years later for a $300 million profit.

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