TORONTO (CP) _ Rogers Communications (TSX:RCI.B) is paying $137.5 million in cash for several TV channels, including the A-Channel group, to be divested by CTVglobemedia Inc. amid its $1.7-billion acquisition of CHUM Ltd.
The Canadian Radio-television and Telecommunications Commission, which regulates the broadcast industry, including mergers and acquisitions, should be pleased with the deal, one analyst said Monday.
"The CRTC will love it," said John Henderson of Scotia Capital. "They want less market concentration and this adds to the level of competition in the market, and I don’t think the CRTC would have any problem with this."
The acquisition will be handled by the Rogers Broadcasting division and the stations will get some tender loving care, a company spokesperson said.
"They’ll be come a primary focus for us," said Jan Innes, vice-president of communications for Rogers Communications. "We feel they were a bit lost with the previous owner. They will be very important assets for us."
Innes said Rogers doesn’t expect the deal to go through until the end of this year or early 2008, since the CRTC has to deal first with the CTVglobemedia’s acquisition of CHUM.
Rogers will acquire:
_ The A-Channel station group of six conventional broadcast television stations in Victoria and Ottawa, as well as Ontario’s Windsor, Wingham, London and Barrie;
_ CKX-Television, a conventional CBC affiliate in Brandon, Man.;
_ ACCESS Alberta, the designated provincial educational television broadcaster for Alberta;
_ Canadian Learning Television; and
_ SexTV: The Channel, an English language digital specialty service.
The company said it will retain the community focus of the local channels.
"Rogers has built its successful television business by serving community-focused and niche audiences," Rogers Broadcasting president Rael Merson said in a release.
"The acquisition of these 10 television services will significantly expand our television operations and solidify our position as an important participant in the Canadian television industry."
CTVglobemedia owns CTV, Canada’s largest private television network, and the Globe and Mail newspaper. Last month it announced Competition Bureau clearance for the CHUM acquisition and CRTC hearings into the transaction are slated to begin April 30.
CTVglobemedia is owned by a group that includes Woodbridge Co., the private investment company of the Thomson family, Torstar Corp. (TSX:TS), the Ontario Teachers Pension Plan Board and BCE Inc. (TSX:BCE).
The acquisition is part of a wave of consolidation in the Canadian broadcasting industry as companies bulk up to compete.
In February, Montreal-based broadcaster Astral Media Inc. (TSX:ACM.B) said it was in talks to acquire Standard Broadcasting Corp. in a deal believed to be worth $1.2 billion.
Earlier this year, CanWest Global Communications Corp. (TSX:CGS) and a Wall Street investment bank struck a $2.3-billion deal to acquire Alliance Atlantis Communications Corp. (TSX:AAC.A), a specialty TV broadcaster.
The CRTC will review all three planned billion-dollar takeovers, which could lead to new federal policies on acquisitions and consolidation in the Canadian broadcast sector.
John Henderson of Scotia Capital said the Rogers deal is very small, relative to the wireless phone and cable company’s overall profit. In 2006, Rogers earned $622 million or 97 cents per share on revenue of $8.84 billion. Wireless accounted for more than half of its revenue in the fourth quarter of 2006, and cable represented about one-fifth.
In its outlook for 2007, released with fourth-quarter and year-end results in February, Rogers forecast revenue of $9.7 billion to $10 billion, with an operating profit of between $3.25 billion and $3.4 billion.