Ten Network Holdings (TEN) 2015 AGM Report

Company/ASX Code : Ten Network Holdings Limited (TEN)
Venue :
10am Four Seasons Hotel
199 George St
Sydney, New South Wales
Monitor : Mr Allan Goldin
AGM Details / NoM : Thursday 17th December, 2015
# of Attendees : 66 shareholders/proxyholders and 52 visitors
# Holdings represented by ASA : 52
Value of Proxies : $86,000
# Shares Represented by ASA : 570,000
Market Capitalisation : $434 million

Board restructured following Foxtel investment

Chairman, David Gordon, and CEO, Paul Anderson, gave comprehensive reports covering financial results (loss less than previously so getting better), approvals for Foxtel’s investment in TEN and other associated strategic arrangements, the issue of $77m in new shares to Foxtel and the fully underwritten pro rata renounceable offer to TEN shareholders; operational highlights including TV programming, audience shares, tenplay, advertising sales representation arrangement with MCN, appointment of new Chairman and CEO July 2015. The company will be appointing a new CFO soon.

They spoke about their Strategic Goals (clear focus on improving profitability and returns to shareholders, Grow revenue and audiences across all platforms and invest prudently in content, Lead the industry in social media, Increase power ratio via strategic partnership with MCN, Strategic investment in new content and Develop digital platform and multi channel strategy).

Details covered were on Audience Growth and Revenue Share Growth. A video was shown of successful new formats in 2015, the growing established formats with 2016 returning and new hits, both domestic and international content – a good ad!

Main points on Outlook and Cost Guidance were TV ad market remaining short in terms of forward bookings, TEN Q1 FY16 Gross Advertising Revenue up at least 10% year on year, transition to MCN completed with improving revenue share and power ratio a key focus, FY15 TV costs (ex selling) down 6.5% with FY16 TV costs (ex selling) expected to increase by 6.5% (reflecting program cost contractual increases and disciplined, selective investment in new prime time content to drive revenue growth). Non-programming costs (ex selling) expected to be flat.

It was announced on the day that Board would be reduced to 6 with 2 independent directors (one being the Chairman) and nominees from other substantial shareholders. Following meeting Ms Holgate, Messrs Hawkins and Cowin stepped down with Messrs Long, Klepke, Gleeson, Gordon Gordon and Ms McKenna remaining with Richard Freudenstein from Foxtel (CEO and MD) appointed to Board.

The Chairman mentioned that further Board changes are anticipated in 2016. In relation to the proposed election/re-election, he said that the size would enable ‘more nimble decision making and better reflect current scale of the business’. The ASA representative encouraged slightly larger Board with at least 4 independent directors.

All resolutions were subject to poll. The re-election of Brian Long and the approval of consolidation of share capital following the Foxtel transaction attracted strong positive vote. The re-election of Ms Siobhan McKenna had a 10% vote against.

ASA was opposed to allowing more than 15% of shares to be issued and were joined by 15% of the votes. We along with slightly more than 12% were against allowing termination benefits greater than statutory requirement. ASA were in favour of the remuneration report after the changes made this year but 17% weren’t as did 15% not like granting performance rights to the CEO.

Major shareholder, Bruce Gordon, spoke from the floor encouraging shareholders to have faith in the future of TEN. He rarely spoke publicly like that.

Lots of questions, particularly from Stephen Mayne, with some from ASA and other shareholders. Questions included perceived very strong Murdoch involvement, size of impairment on intangible assets, programming, not winning NRL/AFL, disappointment in share price and need for deferral of STI into equity.