Channel 10 takeover bids: What's really going on at Ten? The Australian's Darren Davidson explains why Foxtel and Discovery have their eyes on a stake in the number three broadcaster. The Bachelor has been a solid ratings performer for Ten. YOU know it for MasterChef, The Bachelor, The Project and endless repeats of The Simpsons in the 90s. You probably also know that Network Ten has had a bad run in recent years with a number of failed programs, lacklustre ratings, diminishing share of the advertising market and a revolving door of management. But now the third commercial network in Australia is being courted by suitors far and wide who are interested in taking over the operation. So just what is going on? Ten has long been the "third" plank in Australian television, lagging behind Seven and Nine. But for a while it didn't matter because it had what advertisers so desired: a young audience. And in the halcyon days when its catalogue of programming - The Simpsons, The X-Files, Neighbours, Big Brother and Australian Idol - drew in those viewers, Ten has in a sweet spot. So it wasn't that long ago when Ten was the most profitable network of the three. MasterChef remains one of the network's most popular shows. But those times have changed. Younger viewers are increasingly abandoning traditional, linear TV, especially when it comes to overseas programs which can be viewed online, legally or illegally. Since that shift, Ten has been plagued by an identity crisis of sorts. An attempt to recapture the youth audience with programming that management thought would appeal - The Shire and Being Lara Bingle springs to mind - turned into ratings and critical disasters. It's taken Ten two years to begin to recover from its tarnished reputation following that rocky period which also featured cuts and mass redundancies at the network. But when ad man Hamish McLennan joined Ten as its chief executive in March 2013, he realigned the network's focus to an older demographic (25 to 54), the same demographic Seven and Nine were chasing. Chief executive Hamish McLennan has been at the helm since the beginning of 2013. Rehashed formulas such as The Bachelor and Family Feud have performed well for the network ratings-wise. A return to classic MasterChef, following an ill-advised "controversialising" of the format to be more in the vein of the lower-brow but popular My Kitchen Rules, also saw fans of the show return - even if those ratings aren't anywhere near its peak. While none of its shows break the ratings needle, not many shows do these days. A show that consistently rates above 1.5 million metro viewers is almost unheard of now. Punters have said that one of Ten's main challenges has been its lack of marquee sports programming after losing its portion of the AFL broadcasting rights in early 2011. Owning the broadcasting rights to a mass-appeal, national sport is key to promoting the rest of a network's line-up. In the 12 months to August 2014, Ten reported a loss of $168.3 million. In the first six months of the year, Ten's share of the advertising market between the three commercial networks was 20.1 per cent, half of Seven's 41.3 per cent. Shows like The Shire and Being Lara Bingle tarnished Ten's reputation in 2012. Ten is currently a publicly listed company on the ASX. But four billionaires control more than 40 per cent of the shares. Media scions James Packer and Lachlan Murdoch (non-executive co-chair of News Corp, the publisher of news.com.au) have a combined 17.88 per cent. Bruce Gordon, who owns regional network WIN, holds on to 14.9 per cent while mining billionaire Gina Rinehart controls 10 per cent of the network's shares, initially buying into it in 2010. Fairfax has reported that Lachlan Murdoch and James Packer would be willing sellers. Foxtel (50 per cent owned by News Corp) is a potential buyer. Meanwhile Mr Packer resigned from the Ten board in 2012 after a public feud between Seven and Ten over former executive James Warburton's defection. News Corp's Lachlan Murdoch is expected to sell his stake in Ten in a potential deal. Ms Rinehart has not declared her position on whether she would sell but earlier this month, she resigned from the Ten board which could indicate a willingness to offload an investment that has only cost her money so far. Ms Rinehart has been concentrating on Hancock Prospecting and has just entered into a new dairy venture. But it's media mogul Mr Gordon who could prove to be headache for potential buyers. Mr Gordon told the Australian Financial Review he would not sell his stake "at any price." But Mr Gordon owns 14.9 per cent of Ten's shares and a compulsory acquisition of all stock would not be triggered unless a buyer could secure 90.1 per cent. In other words, all potential suitors will need Mr Gordon's support. Rumours of a buyout for Ten have persisted for years. Those rumours recently firmed up when Fairfax reported that US cable giant Discovery Communications has teamed up with Foxtel to make a bid for the free-to-air network. Bruce Gordon has indicated he's unwilling to sell up. Discovery has made recent acquisitions in Europe and the UK and its recent financial results have been robust while its stock prices have been on the climb. So it's unsurprising it has set its eyes on Ten. In media circles, Foxtel has long being flagged as a potential buyer for Ten, especially after Lachlan Murdoch bought into the free-to-air network. Ten and Foxtel have many synergies they could exploit if a deal was successful, including combining its production resources and teaming up for sports broadcasting rights bids. Additionally, Ten and Foxtel could also combine its advertising sales functions, a tie-up that has previously been bandied about. Another US cable giant, Time Warner, was also in the mix earlier this month with an offer reportedly worth $680 million. Time Warner, which owns HBO and CNN among others, recently rejected an $80 billion acquisition offer from News Corp. However, AFR reports suggest Time Warner has dropped out of the race to buy Ten. There have also been several private equity firms and hedge funds who have expressed interest in Ten, the most prominent of which was American company Hellman and Friedman. Ten's nightly news offering, The Project. Ten confirmed it has appointed Citi as a consultant to handle the whole process. Press reports suggest the Discovery/Foxtel offer is the frontrunner so far. But Foxtel wouldn't be an equal partner in the bid because Australia's media cross-ownership laws prohibit a company from owning more than two mediums. In the case of News Corp, its stakes in print and digital media and its half-ownership of Foxtel fulfil that quota. Rupert Murdoch has said that Foxtel is only interested in buying a "small piece" of Ten. Foxtel has been tipped as looking at buying a 14.9 per cent stake. The ACCC's Rod Sims told The Australian that if the transaction was to go ahead, the competition watchdog would likely scrutinise the deal. Two years ago, the ACCC rejected Kerry Stokes" bid to take over Consolidated Media Holdings, which at the time held 25 per cent of Foxtel. The ACCC ruled that Mr Stokes" significant stakes in both Foxtel and Seven would be anti-competitive. Media companies have been lobbying the government to relax or abolish the cross-ownership restrictions. Of course, as Ten itself has said, all this might come to nothing. That Ten would be bought out is far from a guarantee and we can all hop on this merry-go-round again a few years down the track. Ten declined to comment. Offspring, one of Ten's flagship dramas, has not been confirmed for the 2015 schedule. Originally published as What the hell is going on at Channel 10?