Bell Globemedia’s out-of-the-blue takeover bid for CHUM may be bad news for staffers at the latter’s TV and radio stations, and for those concerned about the concentration of ownership in the news media – but it could also lead to extra funding in the neighborhood of $170 million for independent producers, depending on the CRTC’s math.

Pending approval by both the regulator and the Competition Bureau, the deal announced on July 12 will see BGM swallow CHUM and its 33 radio stations, 12 over-the-air TV stations and 21 specialty channels for $1.4 billion.

‘Bell Globemedia is clearly the most logical buyer of CHUM,’ said BGM president and CEO Ivan Fecan in a statement. ‘There is a unique strategic fit to our operations that can make the united company a stronger national champion in broadcasting. We intend to maintain and build the valuable CHUM brands and develop more opportunities.’

BGM also owns CTV, a platoon of specialties including TSN and MTV Canada, and The Globe and Mail.

But the CRTC, looking to offset the ill effects of consolidation, will also require BGM to set aside funding for independent producers. Such benefits packages are usually equal to 10% of a deal’s price tag.

The question is, then, how much is CHUM really worth?

The CRTC must decide whether the benefits package will be based only on the $1.4-billion buyout offer for CHUM – in which case it will be around $140 million – or whether BGM is on the hook for the $300 million in debt it will assume, putting the tangible benefits closer to $170 million.

The value of the CHUM package may also be driven down by any radio stations included in the deal, as the CRTC traditionally demands only 6% for radio deals. Some radio stations may also be spun off, and the CRTC could force additional divestitures over media concentration concerns. CHUM, for instance, was forced to sell Toronto 1 when it bought Craig Media in 2004 because it shared a market with CHUM’s Citytv flagship station.

BGM will also subtract what it receives for CHUM’s six A-Channels and Access Alberta, all being put on the block in a preemptive effort to appease the CRTC.

BGM says it will keep CHUM’s City stations, although they overlap with CTV affiliates in Calgary, Toronto, Vancouver and Winnipeg.

The deal will also presumably include CHUM’s expansive library of Canadian-made shows, which will be useful to CTV and its sister channels – which tend to air mostly U.S.-made fare – as they move more into online broadcasting.

BGM says its CHUM package will likely be modeled on the $230-million BCE package – the result of Bell’s purchase of CTV in 2000 – which aimed at putting as much money on the screen as possible, including $45.5 million for TV movies, $18 million for documentaries, and $25 million for dramas. The BCE package put cash into series including Degrassi: The Next Generation, Canadian Idol and MOWs such as Lives of the Saints and Spirit Bear.

The approval process is expected to take at least a year and, if okayed, will introduce the CHUM package just as that of BCE runs dry in 2007.

Guy Mayson, president and CEO of the CFTPA, wants the CRTC to ensure that the BGM purchase increases production opportunities and viewer choice.

‘There’s concern that as the industry consolidates, there’s fewer windows. So we would be very interested in making sure those [CHUM] windows are maintained and increased,’ he says.

Others are calling for the deal to be killed.

‘Regulators need to intervene now to stop the sale and stop the layoff of hundreds of CHUM employees and to protect the public interest,’ says Peter Murdoch, VP of media at the Communications, Energy and Paperworkers Union of Canada, which represents around 2,000 workers at CHUM and CTV.

Liberal MP Dan McTeague, who sits on the House of Commons industry committee, also warned that the deal ‘goes too far down the road of media concentration’ in The Globe and Mail.

The buyout comes shortly after a Senate report warned that concentration of ownership in the media is watering down news reporting in Canada. The same day BGM made its move, CHUM cut 281 news jobs, saying it needed to control costs (see story, above), though a CHUM spokesperson insists the cuts had no connection to the takeover.

BGM has intimated that it will keep the Citytvs aimed at young viewers to distinguish them from CTV stations, though there’s fear that the former’s dedication to innovative production could be lost in the post-takeover shuffle.

BGM has offered $52.50 for each voting share and $47.25 for each non-voting share of CHUM, which is controlled by the Waters family through its 88.6% stake.

The deal appears to have been triggered, at least in part, by the death late last year of CHUM founder and majority shareholder Allan Waters, who is believed to have opposed selling out.

Weeks before Waters’ death, BGM was put on the block by its parent BCE. In a deal still under consideration by the feds, BCE is looking to drop its stake from 68.5% to 20% – selling the difference to the Woodbridge Company, which currently owns 31.5%, and to newcomers Torstar Corp. and the Ontario Teachers’ Pension Plan.

BGM will shortly mail out a circular to CHUM shareholders outlining its offer. The CRTC is not expected to consider the takeover deal before the year-end. *

-With files from Sean Davidson

www.ctv.ca

www.chumlimited.com

Big deals in Bell-CHUM wake

Amid speculation that Bell Globemedia’s purchase of CHUM would lead to more buyouts, Astral Media and Corus Entertainment announced their acquisition of the remaining 20% ownership stake in Teletoon from Cookie Jar Entertainment for approximately $96 million.

Once Cookie Jar’s portion is split by the companies – pending CRTC approval – Astral and Corus will each own 50% of the all-animated specialty channel. The Canadian media heavies made the announcement less than 24 hours after the BGM-CHUM acquisition was revealed.
Astral CEO Ian Greenberg told reporters that his company had also been in the bidding for CHUM, and expressed interest in now pursuing the acquisition of Corus.

Also, Lionsgate Entertainment on July 13 trumpeted a deal with Studio Canal that gives LGE access to 2,000 new titles from Canal’s library. Lionsgate’s pre-deal library stood at 5,500 titles. New additions through Canal include the 1983 Robert Duvall drama Tender Mercies and cult fave Evil Dead II, further expanding Lionsgate’s assets for television, Internet and VOD distribution.

Earlier that week, LGE purchased TV distrib Debmar-Mercury, which handles Comedy Central’s South Park, and the Lionsgate-produced series The Dead Zone, giving LGE the newfound ability to syndicate its own programming. *