Corus tooning up with Nelvana buy

Animator's founders would stay in current exec positions

TORONTO — Corus Entertainment has inked a deal to buy TV animator Nelvana for C$554 million ($376.7 million).

Rumors of the deal had been circulating for some time. Corus is one of Canada’s larger media companies — it owns radio, specialty, pay and conventional TV channels, including kids’ channels YTV and Treehouse, and 20% of Teletoon; Nelvana bills itself as the largest independent producer of kids’ TV animation in the world.

In a Toronto press conference Monday, Corus prexy and CEO John Cassaday said that the deal is similar to the BCE/Thomson, CanWest/Hollinger and AOL/Time Warner mega-deals announced recently, only smaller — and better.

“While these acquisitions are certainly larger, none of these combinations are as strategically compatible as the Nelvana/Corus combination we’re announcing today,” Cassaday said.

Cinar grab

A deep-pocketed parent like Corus would certainly be very attractive to Nelvana, noted CIBC Wood Gundy Montreal analyst Adam Shine, because it’s no secret that Nelvana would very much like to get its hands on the assets of Cinar. The future of Cinar — an embattled former Canuck stock darling and Nelvana competitor — is very much up in the air as the Montreal-based animator struggles with lawsuits and investigations regarding its fiscal conduct. There are other compatibilities too, noted Shine. “Certainly Nelvana brings the content part of the equation to Corus, and while Corus has largely been a Canadian story, Nelvana, with its distribution base in 160 countries is much more of an international story that adds dimension to Corus,” he added.

“We think this will help us grow the already strong relationships we have with other vertically integrated companies like Nickelodeon and Fox and Warners and Disney,” said Nelvana co-CEO Michael Hirsh. “We’ll be able to sit down together as both buyers of their product and people who sell them product, and (this deal will help us) maximize that relationship as we move forward.”

Exec stability

The trio that founded Nelvana in 1971 — Hirsh, co-CEO Patrick Loubert and Clive Smith, the company’s senior exec VP — will remain in their current positions and have signed multiyear contracts.

The purchase, which works out to $32.64 per share, 60% of which will be paid in cash and 40% in Corus shares, is set to close in November, pending regulatory approval. Cassaday noted that Nelvana consciously worked to keep the deal Canadian; if Nelvana had chosen to sell to an international company, he pointed out, the purchase would not have required the approval of Canuck broadcast regulators.

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