The big change for one half of the Canwest empire now has a roadmap: Canwest announced this morning that Shaw Communications would buy a 20% equity interest and 80% controlling interest in Canwest Global once the company emerges from creditor protection.
Coverage at The Globe and Mail (of course, with analysis and more analysis), CBC, Reuters, Canadian Press, Wall Street Journal and Financial Post. Though financial terms won't be disclosed until after regulatory approval, Shaw is spending at least $65 million on this acquisition.
Canwest Limited Partnership, which owns the National Post, Montreal Gazette, Canada.com and other publishing assets, is unaffected by this. They will still be auctioned off as part of their restructuring.
Corus Cable Empire?
Assuming the deal goes through (and there's no big reason to believe it won't), the Shaw family will have control over a worryingly large number of specialty channels in Canada. They have a controlling interest in Corus Entertainment, a company spun off from Shaw to get around a CRTC rule about cable companies owning specialty services - a rule that no longer exists.
Corus owns or has a majority interest in (copy-pasted from Wikipedia):
- CMT Canada (90%)
- Cosmopolitan TV (67%)
- Drive-In Classics (rebranding to Sundance Channel on March 1, 2010)
- Dusk (51%, the rest owned by Canwest already)
- SexTV: The Channel (rebranding to W Movies on March 1, 2010)
- SKY TG24 (50.5%)
- TLN (50.5%)
- tlñ en español (50.5%)
- Treehouse TV
- W Network
It also has a 50% share with Astral of the Teletoon channels.
Canwest owns - and Shaw would get:
- Fox Sports World Canada
- Mystery TV - 50% and managing partner
- TVtropolis - 66.7% and managing partner
And the former Alliance Atlantis channels through a deal with Goldman Sachs:
- (Showcase) Action
- BBC Canada - 80% and managing partner
- BBC Kids - 80% and managing partner
- Discovery Health Canada - 80% and managing partner
- DIY Network - 68.1% and managing partner (Corus owns a minority stake in this channel)
- Food Network Canada - 57.58% and managing partner (Corus owns a minority stake in this channel)
- History Television
- HGTV Canada - 80.24% and managing partner
- IFC Canada
- National Geographic Channel Canada - 80% and managing partner
- Showcase Diva
Add to all this minority stakes in mentv, One, Historia and Séries +, and you've got a pretty huge specialty empire here, 31 channels. That would put it ahead of CTVglobemedia's 29 channels, and way ahead of other specialty players Astral Media (9 plus The Movie Network and Super Écran), Quebecor Media (8) and Rogers (6).
It should go without saying that the specialty assets - and not the Global Television Network - are why Shaw is interested in this acquisition.
The release says that Shaw would operate Canwest as a standalone company (instead of, say, just taking its assets and giving them to Corus), but you have to think that some sort of consolidation is going to happen if they can get it past the CRTC.
Another (albeit minor) question is what happens to the few conventional TV stations that Shaw and Corus own. Shaw owns CJBN in Kenora, Ont. (a station with the distinction of being Canada's lowest-powered non-repeater, at 178 Watts), which is currently a CTV affiliate. Corus, meanwhile, owns CKWS Kingston and CHEX Peterborough in eastern Ontario, both of which carry CBC programming. None of the three stations are in cities with Global stations, so it's conceivable they could all become Global affiliates or even sold to Canwest and become Global owned and operated stations.
Shaw's second chance to prove its point
My favourite part of this story comes out of a quote from Canwest chairman Derek Burney (emphasis mine): “We look forward to benefitting from Shaw’s participation in a reinvigorated Canwest, as it is a strong business partner with a proven commitment to the Canadian television broadcasting industry. This significant investment in conventional television should be seen as a big vote of confidence in the industry and its future.”
Remember those "cable company cash cows"? Funny how useful one of them has suddenly become now that the TV company needs a bailout.
But as much as this is ironic for the Local TV Matters people, it also forces Shaw to prove its point about how conventional television isn't in need of financial support from cable and satellite companies.
Last year, after Shaw sarcastically offered to buy three stations from CTV for $1, and CTV sarcastically accepted, it later pulled away from the deal, claiming that due dilligence showed the stations were hollowed out shells and work had been outsourced to other stations.
Shaw can't make that excuse this time. While many Global stations are little more than a newsroom, a couple of editing suites and a green screen, Shaw gets the broadcast centres that control them, and can do with them as they wish.
So will Shaw back down from its tough talk about fee for carriage? Will Canwest pull out of the Local TV Matters group, stuck in the same awkward position as CityTV and TVA where the parent company cares more about protecting cable profits than local television?
We'll find out within the next few months. (Though by the time Shaw's acquisition is final, the fee for carriage debate might be over.)
UPDATE: The Financial Post explores a big thorn in the side of this deal: Goldman Sachs, which is still fighting with Canwest over the company that owns the former Alliance Atlantis channels.