deal

It looks like Maclean Hunter, at the ripe age of 107, is disappearing into the fold of Rogers Communications. At its annual meeting on March 8, Rogers announced a signed deal to take over mh, with a 50-cent bump per share tying the knot. The courtship, which began with a buyout bid, continued for a month with a slew of spats including mh’s threat of popping a poison pill and a supposedly unshakable commitment from ‘cable-czar’ Ted Rogers not to raise his bid from $17 cash per share.

In the end, the 50-cent increase – in the form of a special dividend – secured the deal and amounts to a $90 million increase over Rogers’ original $3 billion bid. The thorny issue of selling participating rights to mh’s u.s. cable tv business was eliminated from the bargaining table.

It is speculated on Bay Street that Rogers took the offer only after discovering there was no better deal out there. Despite denial by mh chief executive Ronald Osborne, there is additional speculation that Rogers’ March 4 proposed swap of cable systems with Shaw Communications (providing the buyout goes through) put the pressure on mh to resume talks with Rogers.

One of the primary incentives behind Rogers’ move was to consolidate the cable industry in Canada, thereby creating a company able to compete on the looming information highway.

Michael McCabe, ceo of the Canadian Association of Broadcasters, looks favorably on the deal: ‘What’s happening here is the way of the future. Rogers is right – we need larger units to compete in the international marketplace (where) the competition will only intensify. It’s important that the regulator ensure equal and fair access for all programmers, and I think they will do that.’ McCabe concluded: ‘I think we’ll be seeing more of this kind of move in the future.’

Canadian Film and Television Production Association chairman Kevin DeWalt thought that, for independent producers, ‘it’s too soon to tell,’ but overall he envisions ‘a benefit to the system.’ The prospect of stacked licences is not an issue, DeWalt says: ‘We don’t see any immediate concern that Rogers will become a one-stop shop for producers.’

On the telecommunications front, Liz Ostiguy, national director of government and external relations for Stentor Telecom Policy, considers the buyout as creating a level playing field: ‘If the deal gets approved by the crtc, (telephone and cable) are now getting into the same ballpark. With this acquisition, Rogers becomes `size-wise’ greater than any of the telephone companies other than Bell Canada and (we) would hope that the same level of regulation would apply.’

If the offer closes as expected by the March 31 deadline, the crtc will be looking at a two-year ordeal of regulatory hurdles. Issues of programming access, media concentration, public impact and service delivery will all be assessed by the crtc, which ultimately has the power to alter or block the merge.

Bill Allen, spokesperson for the crtc emphasized the need for the buyout to be finalized before the crtc can take a stand. ‘Then,’ he said, ‘we can either approve, deny or alter the application.’ Whatever comes down the line, Allen is ‘expecting lots of questions.’

Ian Morrison, spokesperson for Friends of Canadian Broadcasting, disputes the crtc as the right body to regulate prospects of what he terms ‘excessive control for one person (Ted Rogers). We don’t have a lot of faith with the crtc, (they) have a lot of discretion, just not a lot of courage.’

Morrison has assessed the Rogers’ buyout as creating a virtual monopoly, which would, in turn, ‘restrict viewer choice’ and allow Ted Rogers to ‘make or break any one of the cable-distributed services.’ He concluded by asserting that, in consideration of the information highway, Rogers is ‘trying to establish himself as a gatekeeper, in the face of what this highway is supposed to be all about: choice.’

With the closing of the deal, Rogers will serve about one-third of the Canadian cable market, 40% of the English-speaking market and almost 70% of cable in Ontario.

On the publishing side, the deal includes mh’s 62% ownership of SunCorp, affecting five dailies and a number of periodicals. In the broadcasting arena, 21 radio stations, tv stations in the Prairies, Maritimes and Ontario (including ytv) and a chunk of Unitel are at stake. The merger’s impact on management, employees and cable rates has yet to be disclosed.

Based on 1993 figures as reported in the Globe and Mail, mh and Rogers combined account for approximately 19,000 employees, $307 billion in revenues and $480.7 million in losses.

On March 8, stock prices for Rogers went up $1.25 to $23.25; mh’s went up 62 cents to $17.12.