Shaw to buy Canwest

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), CBCReuters, 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, 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):

It also has a 50% share with Astral of the Teletoon channels.

Canwest owns – and Shaw would get:

And the former Alliance Atlantis channels through a deal with Goldman Sachs:

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.”

Of course, Shaw and Canwest have been on the opposite side of the ugly fee-for-carriage debate, with each side spouting half-truths at each other in a bid to scumsuck public support.

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.

14 thoughts on “Shaw to buy Canwest

  1. Fassero

    It’s an interesting turn of events. Rogers guts CITY. Shaw buys Canwest. BellTV just announces a complete rejigging of their satellite packages (in Quebec….for now….) along the lines of what CBC proposed to the CRTC. One has to wonder if the cable and satellite providers are just hedging in case they are obliged to pay carrier fees. Own the over-the-air channels and, in effect, you’re paying yourself (via your subscribers.) This is shaking out as a wild year for Canadian television (ownership that is.)

  2. Jean Naimard

    Yay cross-fornicating media behemoths.

    This yet another nail in the coffin of Democracy (which needs informed citizenry) in the slow downwards spiral towards fascism.

    1. Shawn

      Jean, I despise Canwest, as well. But based on some of the things I’ve read from you in this very comment section over the years, I’d be much more worried about fascism if you were in charge, and that’s the truth.

      1. Jean Naimard

        Well, luckily, I despise the oxdung that’s all too attendant to democracy, so there is not much chance for that to happen.

        Of course, if there is a revolution, that’s another ballgame… :) :) :) :) :) :) :) :)

  3. Anonymous

    Note that Peterborough does have a Global Toronto repeater, on channel 27.
    Kingston is nominally covered by Global Toronto’s Bancroft transmitter on ch.2.
    There is no reason for Global to take on CHEx and CKWS affiliates, and the CBC doesn’t seem to have a problem with Shaw having a CTV affiliate and Corus owning two CBC affiliates.

  4. david

    The demise of Canwest Global as as Asper company is just another example of how second generation children can loose an inheritance by just being incompetent anf greedy.Quebcor and the Paledeaus are another good(poor)example.

    1. Shawn

      Indeed, although I think Steve linked to an article — I read one, somewherem anyway — stating that it’s been the profitability of Quebecor (and Rogers) that helped inspire the Shaw deal.

      I’ve been hearing about the woes of Quebecor for so long that it took me by surprise. But if Quebecor is now a profit engine (?), I guess the kid deserves some credit.

      1. Fagstein Post author

        Quebecor is hugely profitable, thanks almost entirely to Videotron.

        You may be confusing Quebecor Inc. with Quebecor World Inc., the printing company formerly owned by Quebecor (and not, as its name would imply, the other way around) which went under creditor protection and is now WorldColor Press.

        1. Shawn

          Right, but my point remains: does the Peladeau scion deserve any credit for this or not? He’s the one who led the company down the path of media convergence, not papa.

  5. ATSC

    Rogers owns the CITY network
    Shaw will probably end up with Global
    Bell has some piece of CTV
    Videotron has TVA

    Kinda see what I’m getting at. BDU’s owning OTA networks.
    A little worrisome. Especially when they are allowed to own all their affiliates.
    I think the CRTC needs to apply FCC type or regulations. Regulations on how many Network owned and operated stations each network can have. I believe the number is something like 40% in the US.

    Too much power in to few hands.

    1. Jean Naimard

      I think the CRTC needs to apply FCC type or regulations. Regulations on how many Network owned and operated stations each network can have. I believe the number is something like 40% in the US.

      Are you crazy? And then nix all chances of extra-profitability through “economies of scale” (read: massive redundancies) brought to you by the holy “convergence”???
      (Bonus point for those who see how “convergence” can be a naughty word in french).

      1. ATSC

        The FCC rules of limiting O&O network stations insures that local TV remains local and not network centralised. The current CRTC rules allows companies to strangle local TV, and kills local production. The US model can be seen at work just by looking at the Plattsburgh/Burlington market. It seems to be working much better than the current mess that representing Canadian markets.

  6. Alex H

    It is perhaps the biggest condemnation of the cable and sat business when your realize that they alone appears to be the only ones left in Canada with enough money to buy and operate TV, radio, and newspapers. For these companies to be so cash rich that they can afford to buy into all sorts of failing business makes you wonder.

    It is time for the CRTC to wake up and realize that it is being taken for a ride. Soon the CRTC will have little wiggle room, because they will just be rearranging the deck chairs. Take away money from the cable companies and give to the networks for local TV? That’s okay, because the cable and sat companies OWN the networks these local stations are part of, and they will just shift agreements to make the network time more expensive to the end stations, bringing the money back into the fold in the other direction.

    The current stranglehold is painful. A small number of companies own the stations, the networks, the cable channels, the cable that it is distributed on, and the production companies that make the content. More over, there is little competition because of the limited and exclusive mandates offered up in each category. The only true remaining competition is “dish versus wire”, but even then, it is a big deceiving because even as a player loses some in one place, they make it back in another. They lose a cable customer, but gain payments to their cable channels from the dish people on the other.

    Most Canadians aren’t aware of this, and they would flip out if they really knew what has happened in the last 10 years.


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