Ten pulls plug on MCN ads alliance

News Corp is pursuing plans to bring MCN into closer alignment with other assets after Ten walked away from an ad sales alliance.

News Corp is pursuing plans to bring Multi Channel Network into closer alignment with other assets after CBS-owned Network Ten walked away from an advertising sales alliance with the company to launch a fresh assault on the $16 billion Australian ad ­market.

Just a week after Fairfax Media announced it had decided to sell itself to Nine as part of a $2.1bn cash-and-stock deal, another round of consolidation in the television business is under way, although CBS’s decision to pull the plug on MCN was long-expected.

CBS has instructed Ten to start its own advertising sales unit in Australia after taking control of the network in November, ending a seven-year relationship with MCN to represent Ten’s $600 million ad sales business in the local market, first revealed by The Australian.

The move means Ten will need to hire more than 100 sales representatives in less than five months at a critical time for commercial networks as they negotiate annual agency-volume deals for 2019 with top media-buyers, a suitable end to a topsy-turvy week for CBS.

The American broadcaster launched an investigation this week into sexual harassments ­allegations against Leslie Moonves, its high-profile long-time chief executive.

CBS has effectively given up its 24.99 per cent stake in MCN, which also sells advertising on the merged Foxtel-Fox Sports, the subscription-TV player majority-owned by The Australian’s publisher, News Corp. Foxtel-Fox Sports owns the rest of MCN.

Executives said the split with Ten would allow MCN to focus on Foxtel-Fox Sports as it moves more aggressively into the world of streaming to take on Netflix and other online services.

MCN could also partner with other broadcasters looking to ­attain scale in a digital media market dominated by Facebook and Google, much like it did with Ten, executives said.

CBS exercised a break clause in the MCN contract yesterday, the first day on which the company could do so, in a sign of its long-held intent to take ad sales in-house.

This newspaper reported the deal was shaky despite previous attempts by Ten CEO Paul Anderson to quell the speculation that MCN could be ditched by CBS.

In an interview with The Australian, Mr Anderson admitted CBS had long been pursuing plans to split with MCN to set up its own business, much like its vast US operations.

“CBS has always said ‘This is an unusual situation where you didn’t fully control your revenue’. They’ve said that from day one,” Mr Anderson said.

He said the decision to exit the agreement was driven by a desire to regain autonomy over ad sales, rather than performance, noting that MCN had a “strong reputation” in the Australian market for growing market share in tough trading conditions. “This is about us controlling our own destiny. This is not about MCN,” he said.

Mr Anderson said CBS’s growing ambitions in Australia required a traditional direct-selling approach as Ten offered more content to consumers through online alternatives such as catch-up TV service Ten Play and the soon-to-be launched streaming service CBS All Access.

“The world has changed a lot since we originally entered the agreement, and it’s a different environment now from an ownership perspective,” he said.

Asked whether CBS was happy with Ten’s performance since it took control in November last year after it went into receivership, Mr Anderson said the new owner was taking a long-term ­approach despite losing its prized Big Bash League media rights this year to rivals Seven and Fox Sports.

“We’re only eight months in, which is a relatively short time to get your feet under the desk,” he said.

MCN will receive Ten sales bookings until the end of the year while the two companies separate. Ten chief sales officer Rod Prosser will lead the new sales team.