TORONTO — CanWest Global Communications and Shaw Communications announced Tuesday that the two companies have reached an agreement for carving up the assets of media giant Western Intl. Communications, worth C$1.4 billion ($920 million).
Winnipeg-based CanWest plans to assume control over WIC’s television assets, and Calgary-based Shaw, its radio assets, as was widely expected.
CanWest’s portion, valued at approximately $623 million, includes CITV in Edmonton, CHCH in Hamilton and the 70% of CFCF in Montreal that is owned by WIC.
Shaw’s radio portion, valued at $302 million, includes Power 107 FM in Edmonton and Q107 in Toronto, and pay and specialty TV interests including Viewer’s Choice Pay Per View (Western Canada) and WIC’s Cancom (Canadian Communications Satellite) assets.
The move was hardly a surprise among the financial markets, as rumors of the division have been going the rounds since Shaw outmaneuvered CanWest for majority control of WIC this spring after WIC’s founding family abruptly sold its majority interest.
“I would say we know where they’re going now,” said Ben Dube, a media analyst at CM Oliver & Co. in Montreal. “It’s a good transaction for both parties — finally.”
The arrangement is particularly significant for CanWest Global, which, in picking up four TV stations in Alberta — CITV in Edmonton, CICT in Calgary, CISA in Lethbridge and RDTV in Red Deer — will for the first time have complete national coverage.
While CanWest spokesman Tom Strike notes that CanWest already enjoys the advantages of being a national network, it has yet to sort out how its obligations will change.
If CanWest Global is given official network status, the Canadian Radio-television & Telecommunications Commission (CRTC), Canada’s broadcast regulator, will likely force it to produce or acquire more Canadian-content programming than it currently does.
“The obligations are something between us and the CRTC,” said Strike. “They’re something we’re going to have to negotiate.”
Dube noted that Tuesday’s announcement is a preliminary one, because the deal can’t go through without the CRTC’s approval.
He expects to see some divestiture, particularly on the part of CanWest, to secure that. “I would say this round is the first round about allocation of assets of WIC,” he said. “First they have to close the deal, and probably Shaw and CanWest will have to sell some assets.”
Dube predicts that CanWest will sell WIC’s 70% interest in CFCF in Montreal and its interests in BCTV, both of which he expects will be picked up by the Baton/CTV Network.
Strike conceded that “there is some duplication we’re going to have to work through,” but did not elaborate. Dube also expects Baton/CTV to sell its new Vancouver station, VTV, which started up in September.
As for Shaw, Dube says, “Maybe you’re going to see some divestiture in some of the specialty channels, but not a major one.”
The application will go to the CRTC at the end of September, a CRTC hearing is likely to happen in December or January, and, barring delays, a decision should come down in April or May.