boost for ten as investor buys in

http://www.theaustralian.com.au/media/boost-for-ten-as-investor-buys-in/story-e6frg996-1226813369214#

SYDNEY investor Caledonia Investments has been quietly building a stake in Ten Network, believing the broadcaster's stock has been oversold and that the network is starting to turn a corner following a ratings recovery over the summer.

In a major vote of confidence for Ten's programming strategy, the high-conviction investor is understood to have acquired more than 10 million shares in recent weeks and is believed to be seeking more.

Ten shares have surged 28 per cent this month, leading to a query from the Australian Securities Exchange.

The stock jumped 3c, or 8.96 per cent, to 36.5c yesterday, with Bloomberg reporting a large trade crossing mid-afternoon.

The jump came after Ten's $90 million bet on Cricket Australia's Big Bash League delivered ratings gold, with million-plus audiences creating a marketing platform to build awareness of its coverage of next month's Sochi Winter Olympics in Russia.

Caledonia is said to be impressed by the Big Bash ratings, and Ten's hit-and-run bid for the V8 Supercars rights, which blindsided incumbent Seven Network and shocked observers in last month.

The chief investment officer of Caledonia, which manages about $2 billion, is Sydney fund manager Will Vicars, who is also a director of retail group Oroton.

Caledonia's investment follows the decision by Ten's major shareholders Lachlan Murdoch, James Packer and Bruce Gordon to guarantee a $200m loan from Commonwealth Bank in the wake of a deterioration in revenues that appears to be abating.

It is understood Ten's new shareholder is also banking on outdated media regulations being overturned by the federal government within two years, which could spur merger and acquisition activity in a disrupted media sector as companies consolidate to capture larger audiences and revenues.

Ten's summer ratings revival led CCZ equities to place a buy on the stock.

"We have upgraded our Ten earnings numbers to reflect a return to a 25.5 per cent revenue share by 2017," CCZ equities analyst Roger Coleman said.

Caledonia is one of online advertising group REA's original investors, having taken a long position in 2001.

The operator of realestate. com.au, which is 62 per cent-owned by News Corp Australia, publisher of The Australian, was nurtured in its early years by then News executive and current Ten chairman Mr Murdoch.

REA, which is capitalised at $5.57bn on the ASX, has proved to be astute investment for Caledonia, which normally prefers US and European stocks.

Caledonia's other media investments include British property portal Rightmove and Zillow, the so-called REA of the US, which counts Mr Packer among its shareholders.

The run on Ten's stock comes after new data showed the free-to-air television advertising market remained strong despite hype that it was under pressure from structural challenges, illegal downloading and overseas streaming services.

Among the three main networks, Nine is closing the gap on market leader Seven.

The newly listed Nine posted a 38.74 per cent share of the national advertising market in the December half, just one point behind Seven.

Seven has fallen below the important 40 per cent mark with a 39.74 per cent share, while Ten occupies third place with 21.52 per cent, according to data compiled by KPMG for industry body Free TV Australia.