Letters released to the market confirm their decision to form a tight partnership and merge the voting power of Birketu Pty Ltd and Illyria Nominees, the investment vehicles of Mr Gordon and Mr Murdoch respectively, on June 9, the same day they told the board they would no longer act as Ten's financial guarantors.
Well-placed sources said Mr Packer had expressed a desire to exit the guarantee, which, combined with Ten's aim to increase the loan to $250 million, would have seen Mr Murdoch and Mr Gordon asked to guarantee $125 million each, up from $67 million in the existing arrangement.
under which Ten's existing secured debt would be repaid and any guarantee support would be removed over an appropriate period." This is because licence fee cuts have not yet been passed into law, additional revenue streams identified by consultants McKinsey may not have materialised in difficult trading conditions, and the long-term output contracts with US studios were too expensive.
However, forcing the company into administration may end up being the earthquake that prompts Australia's Senate to relax media ownership laws, which would be of benefit to both men's existing media interests.
If the laws are passed Mr Murdoch would no longer be restricted by the two-out-of-three rule, and Mr Gordon would no longer be restricted by the 'each rule, which prevents a person's television interests reaching 75 per cent of the population.