industry ramifications

A possible sale of specialty service tsn and the emergence of CanWest Global Communications as a possible buyer is capturing the attention of both the broadcast and business communities. This is just one of the scenarios making the rumor mill now that Toronto-based Onex Corporation has been identified as being in hot pursuit of John Labatt Ltd.

Broadcasting-related services under the John Labatt Entertainment Group umbrella include a television production arm, a commercial production house, audio recording and post-production services, and two specialty channels. All were part of the original vision of Supercorp Entertainment, an entertainment production and broadcasting super group formed in 1989 by Labatt and Kessler Music, owned by Syd Kessler and Salim Sachedina.

The animation production house and media buying arms of Supercorp have since been sold off and the audio commercial production business shut down. But Skyvision Entertainment, The Partners’ Film Company, Dome Productions (which incorporates Sounds Interchange), tsn, and the Discovery Channel, are among the properties still owned all or in part by jll.

If Onex succeeds, the ownership of those properties will be in the hands of an investment company with stakes in airplane food, construction materials, and auto parts, that made its first appearance in the entertainment industry when it acquired an 8.6% share of Alliance Communications last October for $16.5 million.

Winnipeg-born Gerald Schwartz, ceo of Onex and now a member of Alliance’s board of directors, expressed a long-held interest in moving into the film and television business when the Alliance acquisition was announced, and has since said Onex plans to spend anywhere from us$700 million to us$2 billion on expansion overall.

Despite a synergy between Alliance’s realm of activities and Labatt’s assets, any ideas about vertical integration do not make mathematical sense, given the current financial configuration.

Jim Reid, chairman and ceo of Skyvision, agrees. ‘I can’t see Gerry taking something he’s going to buy 100% of and turning it over to a company he owns 8.6% of. If anything like that was going to happen, I think he’d want to significantly increase his shares in Alliance, before anything would get dropped in there.’

Partners’ president Don McLean was as surprised as anyone that Onex is making plans to buy some of the assets of jll.

Labatt’s desire to get out of the commercial production business and sell Partners’ has long been documented.

According to McLean, the twists and turns taking place behind the scenes at Labatt are not affecting negotiations working towards the split of Partners’ from Labatt. If analysts are right and Labatt is bought out in the short term, ‘then I guess we’ll be owned by Onex and we’ll have to see what happens next,’ says McLean.

Don Bain, director of communications for CanWest Global Communications in Winnipeg, is fielding numerous phone calls from the media for Leonard Asper, director, corporate development. Bain plays down the speculation that CanWest is interested in tsn.

May 2 is the deadline for applications for British Channel 5, and that’s priority at the executive level right now, says Bain. Currently in London, Eng. are Izzy Asper, CanWest chairman and ceo, Thomas Strike, executive vice-president business development and cfo, David Asper, director, special projects, and Greg Gilhooly, deputy director, corporate development.

The fallout from speculation that CanWest is interested in tsn is getting out of control, Bain says. CanWest is entertaining the proposal and ‘it looks like something we might be interested in, but it’s very much in the preliminary stages,’ says Bain.

tsn would be CanWest’s first venture into specialty services. Although speculation is linking CanWest only to tsn, there are potentially other broadcast properties on the table including The Discovery Channel. Bain is unsure if Discovery was part of the proposal when the investment bankers came to CanWest.