Lachlan Murdoch and Bruce Gordon have been gazumped and embarrassed by the US$28 billion CBS Corp which has won the auction to buy Ten Network Holdings out of administration.

However, the terms of the deal have not yet been announced and will have to be approved at the second Ten creditors meeting next month, where the Murdoch and Gordon interests could attempt to derail the deal.

The result is both a disaster and a humiliation for Lachlan Murdoch and Bruce Gordon, whose opportunistic relationship is now expected to come under great strain as their interests diverge.

The only upside for the pair will be that CBS has taken over their role as lender of last resort and they will no longer have to pledge their remaining personal assets to guarantee the A$200 million Commonwealth Bank financing facility which has kept Ten afloat in recent times.

Depending on the cents in the dollar offer from CBS, Gordon, Murdoch and their lending partner James Packer might each get most of their outstanding A$10 million in loan guarantee fees, but that will be small compensation for the triumvirate after taking a collective A$600 million-plus equity write-off.

The Murdoch family will now have to make a strategic decision — does patriarch Rupert use his board and voting control over both News Corp and 21st Century Fox to attempt to salvage the reputation of his eldest son Lachlan who serves as co-chairman of both companies. As it stands, Lachlan’s Ten play is a bigger disaster for the family than OneTel. 

The Murdochs do have some leverage over Ten as a major creditor, program supplier and provider of their advertising sales through Foxtel. However, CBS is a global powerhouse which can easily prop up the network up as a standalone operation if the Murdochs go to war.

Whatever happens, it doesn’t look good for Lachlan Murdoch who will have to write-off his entire A$200 million equity investment in Ten — money that ultimately came to him from his father as part of his second divorce settlement.

It looks even worse for Bruce Gordon who has lost more than A$300 million in Ten and will rely on CBS’s ongoing programming success as the network’s regional affiliate.

The emergence of CBS will almost certainly resurrect the prospects of media ownership reform because it will no longer lead to further Murdoch family domination as the first corporate move following the changes.

CBS brings media diversity to the table, so removing the two-out-of-three rule won’t be such immediate political poison for Labor, the Greens or the various cross-bench Senators.

Its bid won’t need ACCC approval or media ownership changes, but it will need approval from FIRB, which is ultimately a Scott Morrison decision. That should be a formality, although the Murdochs could try a campaign of denigration against CBS to drive some political interference in that process.

It would be very difficult to sustain such an argument given the Murdoch interests are based offshore and CBS brings genuine competition to the Australian broadcast market.

The CBS move is likely to be supported by most of the Australian media sector, including the major sporting codes which want competition and viability among bidders for television rights. First cab off the ranks once CBS has control of Ten will be the Cricket Australia television rights.

CBS’s move to buy Ten ends decades of “will they or won’t they” speculation about whether America’s most successful free-to-air network will enter the Australian market as more than a program supplier to the existing players.

CBS is larger than the Australian media sector with annual revenues of more than US$16 billion and earnings before interest and tax of over US$3 billion.

It will be a formidable competitor for all Australian media and won the Ten bid partly because of the leverage it had as the biggest creditor who claimed it was owed more than A$800 million under programming contracts with Ten and a one-third ownership of Ten’s Eleven channel.

CBS is believed to have indicated that it would not change or lower its contract costings to whomever bought Ten.

However, the Murdoch controlled 21st Century Fox had similar leverage as a huge creditor but struggled to gets its ducks lined up because the family was bidding individually through the financially less capable Lachlan who also had to carry Bruce Gordon’s interests plus the handicap of Australia’s media laws.

At the end of the day, they simply didn’t offer a good enough deal in a competitive process which the corporate regulator ASIC was watching carefully.

The creditors will see the numerically strong Ten employees with a major part to play at the second creditors meeting. With their entitlements protected and the prospect of a job-destroying merger with Sky News off the table, the staff would be expected to strongly support the deal.

CBS has long been driven by news and current affairs, with 60 Minutes their flagship program in the US.

Today’s CBS statement made it clear that the streaming service, CBS All Access would launch as soon as possible in Australia, rapidly changing the local broadcast TV market. It will replace and expand the existing TenPlay.

It costs US$5.99 a month in America or US$9.99 for ad-free streaming and with that you get all the CBS live programming plus access to back catalogues of CBS programs and sport (such as NFL games).

“Network Ten is a prime broadcasting asset with over half a century of experience and brand equity in Australia,” said Leslie Moonves, Chairman and CEO of CBS Corp.

“We have been able to acquire it at a valuation that gives us confidence we will grow this asset by applying our programming expertise in a market with which we are already familiar.”

CBS is controlled by the Redstone family. Sumner Redstone founded it but after a nasty court case in 2016 he is now no longer involved and his daughter, Shari Redstone is the day-to-day boss through a company called National Amusements, which also controls Viacom (MTV and Universal Studios). That makes a lot of programming potentially available for Ten.