CanWest buys Hollinger
‘Get Big Fast!’ says the Canadian Association of Broadcasters, the Canadian Cable Television Association and everyone else under the Northern sun, in response to a skyrocketing global economy.
Nobody in Canadian broadcasting has taken that advice more literally and acted on it faster than CanWest Global, which on the heels of acquiring the bulk of wic’s eight conventional tv assets, bought up the international distribution arm of Dutch tv giant Endemol Entertainment through its entertainment division (see Endemol, p. 6) just days before striking a $3.5-billion deal to acquire newspaper mega-chain Hollinger.
The newest deal is the largest in the history of Canadian media industry. With CanWest buying 100% of Hollinger’s 13 principal metropolitan operations, all of its Canadian Internet properties, its magazine group, 130 of its community papers and 50% of the National Post, it brings the newest national broadcaster in Canada to the height of the Canadian newspaper publishing world.
Under the agreement, CanWest will pay Hollinger $2.2 billion in cash and roughly $600 million in the form of 24.3 million non-voting shares at $25 per share, and 2.7 million multiple-voting preferred shares at a premium of $3.75 over the price of non-voting shares.
Hollinger, which will take back a 10-year subordinated debenture in the amount of $700 million, will acquire a 15% share and close to a 6% voting interest in CanWest, becoming the Winnipeg-based giant’s second largest shareholder, after the Asper family.
CanWest president and ceo Leonard Asper describes the deal as ‘the ultimate convergence transaction,’ as it unites the conventional media of print and electronic content with the 21st century’s online, interactive and immediate technology of the Internet.
CanWest has requested that Ravelston, Hollinger’s parent company, continue to manage the wholly acquired publications for 17 months to ensure a smooth transition. Hollinger will also continue to manage the National Post for the next five years before turning it over to joint CanWest/Hollinger management.
Conrad Black will remain chairman of the flagship paper and CanWest will appoint a co-chair, with equal representation from both companies. Black will also join the expanded 11-person CanWest board.
Izzy Asper, who conceived and initiated the merger terms with Black, said in a statement, ‘We are well-aware of, and sensitive to, the public policy concerns about cross-media ownership. We intend to meet with the crtc immediately to discuss how best to ensure that the public interest is protected, while not foregoing achievement of the corporate efficiencies of this media convergence transaction.’
Prior approval by the crtc is not required as there are no changes in the ownership of broadcasting assets. However, at renewal time – the first quarter of 2001 – ‘it is likely that intervenors or the commission will bring up the issue of concentration of ownership, especially in regard to news,’ says crtc spokesman Denis Carmel.
In the past, for example when Quebecor’s Le Journal de Montreal made a play to purchase broadcaster tqs, the crtc required a watchdog committee be put in place to monitor any breach of public policy. But because this is a reverse deal, the crtc, at least at this point, is less worried.
‘Managed well, this [deal] spells opportunity,’ says cftpa president and ceo Elizabeth McDonald. ‘As long as size doesn’t bring abuse with it, there could be great opportunity for content creators….It invites a lot of different people in on a lot of different venues,’ she adds.
crtc transactional hearings are expected sometime in spring 2001.
Regulatory approval is also required from the Canadian Competition Bureau, which has reportedly never blocked a media merger.
Meantime, CanWest has no intention of ending its media binge at Hollinger. As part of the company’s overall expansion strategy, it plans to move further into the new media and distribution businesses, as well as chart newer territory in the form of sports teams [Blue Jays] and billboard advertising technology. *
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