As news that Channel 10 is to be placed into voluntary administration echoes around Australia, many are asking what this really means for the network and concern is rife for some Aussie favourites including Offspring, Neighbours, MasterChef and The Project.
Channel 10’s billionaire shareholders made the decision that they would no longer guarantee a key loan, which put the Network Ten business at risk of insolvency.
The network has since appointed voluntary administrators.
What does it mean for a company to go into voluntary administration?
When a company goes into voluntary administration, it has determined that it is no longer financially sustainable in its current form and sought the protections available under the Corporations Act to explore a formal restructuring.
An independent third party is appointed to assess all options available and find the best outcome for all those affected.
The administrators will undertake a financial and operational assessment of the business while business, as far as possible, continues as normal. In their assessment, they will be analysing all the data they can in order to draw a conclusion about the best way forward for the network.
The objective of a voluntary administration is to save the company so it can continue to operate. This could mean a potential sale or recapitalisation of the business.
Who will be affected?
In the challenging situation of a voluntary administration or insolvency, there are a plethora of affected parties, including the creditors of the business. One of the key creditors in this situation will be employees.
Network Ten’s employees and their families will be facing a stressful and uncertain period, with many wanting answers over job security and assurance they will continue to be paid.
Suppliers, content partners and financiers of the business will also have concerns about outstanding invoices, payment for services and ongoing commitments to repay loans.
While Channel 10 continues to operate, suppliers and employees will no doubt be seeking assurances that they will continue to be paid.
However, until the voluntary administrators have had an opportunity to complete their initial assessments, there will be limits to the assurance that they can offer.
Early speculation suggests that the inherent value of a television licence will see the network continue to trade and the business ultimately sold off.
As viewers, it’s doubtful we’ll see any major changes to broadcasting and scheduling, so rest assured your favourite Channel 10 shows will continue to air.
In the meantime we wait for more news and for the voluntary administrators to draw their conclusions in order to find the best way forward.
Brad Tonks is business recovery and insolvency director at PKF.
Image courtesy of Network Ten.
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