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Puget Sound Radio  /  General Radio News  /   Shaw should buy Corus - 5 reasons
Posted by: On Air, March 19, 2012, 3:38pm
5 reasons Shaw should buy Corus


The Corus Entertainment building in Toronto                          (Photo: Brett Gundlock/National Post)

          
         By John Ratner

     Monday March 19, 2012

Shares of Corus Entertainment Inc. spiked 7.5% on Friday after BCE Inc.’s bid for Astral Media Inc. had investors speculating about who might be the next media takeover candidate. A BCE-Astral tie-up would make Corus the last major specialty broadcaster standing.

“Astral and Corus are very similar companies,” said Dvai Ghose, telecom analyst at Canaccord Genuity.

He noted that Corus has the monopoly on Movie Central in Western Canada, Astral has the Movie Network monopoly in Central and Eastern Canada, while both own a solid list of specialty digital TV channels and radio stations.

The key difference is that the Shaw family controls both Shaw Communications and Corus, while the Greenburg family is selling control of Astral to BCE.

As a result, Shaw Communications would not have to pay a change of control premium for Corus, as BCE is for Astral.

Mr. Ghose also noted that BCE will have to pay the CRTC’s 10% change of control tangible benefits change over seven years if it acquires Astral, but such a fee would likely not apply given the Shaw family’s control of Corus.

The analyst also sees much more synergies between Shaw Media and Corus than for Astral and BCE’s CTV.

“This is because Shaw Media and Corus even co-own some specialty channels by way of joint venture such as The Food Network,” he said.

Canaccord media analyst Aravinda Galappatthige believes Shaw could bid as much as $28 per Corus share in an all-stock deal. However, he thinks any lower price may not be accepted by shareholders.

“Despite that a potential Shaw acquisition should not represent a change
in control, and thus may warrant a lower premium, we do not believe
that Corus can be taken out for much less than the multiples paid for Astral Media,” Mr. Galappatthige said.

Mr. Ghose’s five reasons why Shaw may bid for Corus

1. Shaw’s acquisition of Canwest demonstrates its desire for content exposure.

2. Combining Corus and Shaw Media (formerly Canwest) could drive meaningful synergies.

3. Since the Shaw family controls Shaw Communications and Corus, Shaw Communications would not have to pay a change of control premium.

4. If there is no change in control, the CRTC may not levy the usual 10% tangible benefits charge.

5. The deal may be earnings per share and free cash flow per share accretive, as well as reduce Shaw’s debt leverage if financed through equity.



http://business.financialpost.com/2012/03/19/5-reasons-shaw-should-buy-corus/

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Posted by: Wiggley, March 19, 2012, 5:42pm; Reply: 1
Weren't they forced to split one company into two by the CRTC after Shaw took over WIC radio properties?  Isn't that why the two aren't already one big entity?  That's why I was surprised Corus was allowed to buy Global.
Posted by: radio30, March 19, 2012, 8:56pm; Reply: 2
Quoted from Wiggley
Weren't they forced to split one company into two by the CRTC after Shaw took over WIC radio properties?  Isn't that why the two aren't already one big entity?  That's why I was surprised Corus was allowed to buy Global.


Shaw actually does own CORUS...sort of.  Yes the CRTC made them split up the two companies.  Yes Corus has it's own President.  And most important...the shaw family tells Corus what to do.  Seperate in name only.  Kind of like an out of reach rsp.  You can't always access the money, but in the end it is yours.
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