Corus to buy Shaw Media in $2.65B mega merger
Two of Canada’s biggest media companies are about to become one.
Corus Entertainment has announced it is buying Shaw Media, including the Global Television network, from cable and Internet giant Shaw Communications for $2.65-billion in cash and stock.
“We are very excited about our game-changing announcement today to acquire Shaw Media,” Corus CEO Doug Murphy said at a press conference in Calgary Wednesday. “This represents a transformational transaction that gives us the scale to succeed in a rapidly-evolving media marketplace.”
If approved by shareholders and regulators, the deal will vault Toronto-based Corus into a leading market position, with the scale it says to compete both domestically and against foreign players like Netflix. The combined company would oversee 45 specialty television channels, including such brands as Food, History, Showcase, W Network and YTV, along with 15 local television stations, 39 radio stations and a host of digital properties including Globalnews.ca.
“The deal brings together a powerful combination of highly-complimentary and synergistic media assets and combines two exceptional management teams that we believe are the best in the business — bar none,” Murphy explained.
Corus also owns children’s content studio Nelvana and publisher Kids Can Press.
“This really sets up a great opportunity for us to bring scale to bear to compete much more effectively in the advertising economy,” Murphy said.
The company would also be a major force in local, with TV-radio combinations in most of Canada’s largest media markets.
Shaw’s sale of its media assets follows its recent $1.6-billion acquisition of WIND Mobile, which added wireless capability to the Calgary-based company’s suite of cable, broadband and data centre products. In a statement, CEO Brad Shaw said the shift away from content will position Shaw “as a pure-play connectivity provider with an attractive growth profile.”
“The media assets were very profitable,” Maher Yaghi, analyst at Desjardins Securities, said in a note to clients, but Shaw is “refocusing” its energies on its wireless assets and improving its cable business in Western Canada, the analyst said.
The deal is one of the largest media mergers in Canadian history, and creates a giant rivalled only by Bell Media, which concluded its own $3.4-billion acquisition of Astral Communications in 2013.
While the Astral deal was held up for more than a year in significant regulatory hurdles, Alberta’s Shaw family is already the controlling shareholder in both Shaw and Corus. As such, the Canadian Radio-Television and Telecommunications Commission already treats the companies as a single entity for most regulatory purposes.
The CRTC is in the process of implementing significant changes to the cable TV landscape, which include a mandatory “skinny basic” package capped at no more than $25/ month, along with so-called “pick and pay” options for specialty channels.
CRTC chair Jean-Pierre Blais has encouraged Canadian media companies to prepare themselves for more global competition and has acknowledged that, in the a-la-carte regime being introduced March 1st, some lightly-viewed channels could be forced to rebrand or go under.
“In this environment, there may be services that don’t survive and that means jobs losses,” Blais warned while announcing the regulatory changes last year.
According to CEO Brad Shaw, the increased scale and flexibility of the combined company makes “it extremely well positioned to succeed in the new regulatory environment.”
Indeed, as part of the sale, Shaw Communications says it will increase its equity stake in Corus to almost 40 per cent.
“Their complementary mix of assets and strong management teams fit extremely well together,” said a statement from JR Shaw, who founded both companies.
“This transaction represents an exciting new chapter and allows us, as a family, to participate in what we see as a very bright future for Corus.”
Together, Shaw Media and Corus employ more than four-thousand people across Canada. The companies say they will be looking to harness the best talent from both organizations, but are also foreshadowing possible job reductions, saying they expect the combination to generate between $40- and $50-million in annual “cost synergies” to be realized within 24 months.
Combined, the two companies generated close to $2-billion in revenue in fiscal 2015.
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