In an $875-million deal, CanWest Global has made a successful offer to purchase NetStar Communications, creating for itself a large, vertically integrated national production empire.

In addition to specialty jewels tsn and The Discovery Channel, the Netstar deal adds another huge production resource to the Global arsenal in the form of Toronto’s Dome Productions and its high-end post, audio and effects arm, d.a.v.e.

Considered together with its acquisition last May of Toronto’s Fireworks Entertainment and its August wic deal, the Netstar purchase means further expansion for CanWest into production as well as post and new media.

Through the wic deal, CanWest gained not only broadcasting assets but Victoria production company Artray Film and Video, Edmonton-based post and transfer company Studio Post and Allarcom Studios as well as commercial production shop Apple Box Productions.

With Dome, CanWest is also acquiring a major mobile production resource which, added to its own mobile capacity and that of wic, means CanWest now owns the biggest mobile production unit in the country, with around 12 high-end mobile trucks running. That array represents about 95% of the private sector market, says Netstar ceo Gordon Craig.

CanWest coo Leonard Asper points to the efficiencies created with the acquisition of Dome’s resources together with Fireworks. ‘When you factor in the wic assets, it’s a great fit – an east/west full-service facility.’

In addition to the Dome/Fireworks efficiency, CanWest also points to a number of other synergies including packaged selling and counter programming of sports properties on conventional and specialty channels, and use of Discovery-owned inventory on Global. In total, these synergies are expected to render $40 million in savings and revenue enhancements in the first five years of combined operation.

Purchasing Netstar is a part of CanWest’s efforts to position itself for the 21st century, says CanWest executive chairman Izzy Asper. ‘This changes CanWest,’ says Asper.

Asper says the deal is consistent with the company’s aim to be the largest conventional broadcaster and the largest cable broadcaster in the country. It also provides a path into new media, ‘which is the future,’ says Asper.

The CanWest founder says the deal also addresses the primacy of expanding broadcast windows, pointing to Netstar’s six proposed specialty applications as well as Global’s own applications. ‘And we’ll have to have programming to fill those channels,’ says Asper.

The $875-million transaction puts a value of $545 million on the entire shareholders equity of Netstar, and includes the company’s debt of $330 million. CanWest will invest $370 million, financed by existing lines of credit. The deal, contingent on 51% shareholder acceptance, was approved by 68% of Netstar shareholders. Craig will continue to head the company.

While pending the usual crtc approval, the purchase is also subject to the exercise of pre-emptive rights by Disney subsidiary espn, which owns the remaining 32% of the company and which has the option to find another buyer for Netstar. In that circumstance, CanWest would collect a $15-million ‘break fee,’ and Asper says his company will not increase its current offer.

Netstar’s assets include tsn, French service rds, TSN SportsRadio, Discovery and Dome, which in turn owns 30% of film processing facility The Lab.

The company also owns the extremely popular tsn.ca Website as well as a 24.9% interest in Viewer’s Choice among other holdings. CanWest says it estimates NetStar’s current year revenues at $275 million with operating profit over $80 million.