Global eyes new parent's purse strings
Commercial web Global, Canada’s perennial ratings runner-up to CTVglobemedia’s CTV, may well be set to give the top dog a run for its money — thanks to its new, deep-pocketed parent.
Global is among the TV assets Shaw Communications is ponying up $2 billion to acquire from debt-ridden CanWest Global Communications in a deal finalized last week.
Calgary-based Shaw also will take over 18 of Canada’s top cable channels, including Showcase, HGTV and History Television.
The TV channels were put on the block after CanWest Global obtained court-sanctioned bankruptcy protection late last year.
In recent years, CTV, with Canadian rights to most of the top Hollywood hits — including the “CSI” and “Law and Order” franchises, “Grey’s Anatomy” and “American Idol” — has dominated the ratings.
And while CanWest’s financial woes in the past couple of years have stopped it snaring the top shows for its network, many believe Shaw will be a more aggressive bidder for U.S. fare.
One reason the Shaw execs were keen to pick-up Global and the cable channels is to provide content for a wireless telephone service it’s expected to launch in the second half of 2011.
The deal fundamentally reshapes the TV landscape in Canada, with Shaw poised to do battle with CTVglobemedia and Rogers, which owns the City-TV stations.
It also puts the former CanWest stations more firmly under the control of a Canadian firm.
As part of the deal, Shaw paid $679 million to financiers Goldman Sachs to acquire the U.S. company’s majority stake in the CanWest cable channels. Goldman Sachs had that equity after it provided coin to help CanWest acquire broadcaster Alliance Atlantis in 2007.
“It’s good news that the company remains in Canadian hands,” says Stephen Waddell, national executive director of actors’ union ACTRA.
Waddell says that allowing a U.S. company to own a majority interest in a Canadian broadcast asset sets a dangerous precedent.
He is also worried about convergence. “Companies are getting bigger and bigger, and the concentration of ownership is in fewer and fewer hands,” he adds.
The other issue for the local TV industry concerns how much money Shaw will pump into local TV production as a result of the takeover. After CTV bought rival broadcaster Chum in 2007, the TV assets in the deal were calculated to be worth $923 million, and CTV had to spend 10% of that on homegrown production to satisfy the broadcast regulator. This created an upswing in production in Canada at the time.
Some financial analysts have questioned the need for Shaw to take complete control of a broadcaster to access content for its upcoming wireless services, noting Shaw could still grab the CanWest content while remaining a minority stakeholder with another partner.
But Shaw president Peter Bissonnette told analysts his company wanted it all.
“We have never been really one to have minority control,” Bissonnette says. “The opportunity to have 100%, to us, is absolutely a blessing.”
The deal marks the exit of the Asper family from the Canadian TV biz.
Former CanWest CEO Leonard Asper had mounted a bid to try to take back control of the TV channels, but failed to win the day. CanWest was founded by Asper’s late father, Izzy Asper, who turned a few local stations into one of Canada’s leading broadcasters.