WIC deal gels

Ending close to 18 months of negotiations, CanWest Global, Shaw Communications and Corus Entertainment have finally signed off on an agreement that, if approved, will see all the assets of WIC Western International Communications split among the three companies....

Ending close to 18 months of negotiations, CanWest Global, Shaw Communications and Corus Entertainment have finally signed off on an agreement that, if approved, will see all the assets of WIC Western International Communications split among the three companies.

As expected, the agreement dictates that Shaw will acquire wic’s distribution businesses, including its 54% interest in Canadian Satellite Communications (Cancom); Corus will take all of wic’s radio stations, pay and specialty tv services and other related assets; and CanWest Global, which will complete its acquisition of all wic’s shares, will be left with all of its conventional tv stations as well as its interest in robtv, turning the Winnipeg-based media company into the third national broadcaster in Canada (with the exception of Newfoundland) and the owner of three tv stations in the Vancouver area.

CanWest coo Tom Strike reserves comment on what the Winnipeg-based broadcaster intends to do about its potential concentration of ownership in Vancouver.

In buying up the whole of wic shares, CanWest, which currently owns 44% of wic, has agreed to pay Shaw and Corus, which together own 52% of wic, a total of $550 million; 75% of that will go to Corus and the remaining 25% to Shaw.

Corus intends to pay roughly $325 million for its new assets by issuing CanWest approximately $85 million of its class b non-voting shares and $125 million of a new series of cumulative convertible preferred shares. Corus’ market cap is currently $650 million.

When all transactions are completed, the new Toronto-based media company expects to receive $295 million in net cash.

(CanWest ceo Leonard Asper says CanWest has no intention of taking a minority position in Corus. Asper says the deal was structured to minimize tax exposure and to ensure that Corus stock, representing one-quarter of the company’s market capitalization, would not flood investors. The class b non-voting shares and convertible preferred shares in Corus will be sold through transactions arranged by Corus, he adds. ‘This allows Corus shares to go out at the right time,’ says Asper.)

Shaw intends to purchase its new assets in cash and, once all is said and done, it expects to receive $35 million in cash.

CanWest estimates it will pay an aggregate cost of $800 million for wic and its remaining assets, once all transactions are complete.

The parties were nine days late in signing the deal, as they had promised the crtc that it would be done by Nov. 1.

‘There were numerous drafting issues, and the multitude of parties, including legal and tax teams, made it extremely grueling,’ says Corus president and ceo John Cassaday.

Nonetheless, they still expect to file applications to the commission by Dec. 1., and crtc hearings are still scheduled for April 2000.

Some of the assets being acquired by Corus include: WIC Premium Television; Viewer’s Choice; Superchannel; MovieMax; Family Channel; Teletoon; wic’s library of programming (with the exception of programs developed originally or for conventional tv); Canadian Broadcast Sales; Electronic Digital Delivery, including its rights to obtain a video-on-demand licence; and applications filed with the crtc to operate certain specialty tv services, including Travel: The Nation of Vacation.

Assets being acquired by CanWest include: CHAN Vancouver (operating as BCTV), CHEK Victoria, CHBC Kelowna, CITV Edmonton (operating as ITV), CICT Calgary (operating as Calgary 7), CISA Lethbridge, RDTV Red Deer, CHCH Hamilton (operating as ONtv), CFCF Montreal, CTEQ Montreal, Western Broadcast Sales, ROBtv, TQS, applications filed with the crtc to operate certain regional all-news specialty tv services, a licence to operate a video-on-demand service; WIC Entertainment, Allarcom Studio; Artray Film & Video, Studio Post & Transfer, Apple Box Productions, and wic’s library of programming that was developed originally or specifically for conventional tv.