TORONTO — Toronto-based Chum Ltd. has inked a deal to acquire Craig Media for C$265 million ($198 million).
Calgary-based Craig is Canada’s largest privately held media company, with five conventional and three specialty channels in western and central Canada. It put itself on the block in January.
Purchase gives Chum, which has 30 radio stations, eight conventional channels in Ontario and British Columbia and 18 specialty TV channels, a much-desired conventional television presence in Alberta. Chum was recently denied TV licenses in that province by Canada’s broadcast regulator.
“Chum’s aspirations to grow in western Canada are well known, and this acquisition provides us with not only an opportunity to reach Alberta and Manitoba audiences on a conventional television platform but provides additional digital channels to complement Chum’s stable of specialty brands,” said Chum prexy-CEO Jay Switzer.
Regulators to weigh in
Transaction is subject to regulatory approvals. Since Chum already has two conventional television channels in the Toronto area, Citytv Toronto and the New VR Barrie, Chum has offered to divest itself of Toronto1, the most recent addition to the Craig stable. “We’ve committed to work in a very timely way to find an appropriate purchaser of this asset,” Switzer told analysts in a conference call Monday, “and it’s important for us to do that as quickly as we possibly can.”
Contenders for the channel, whose launch has by all accounts been disastrous, are Torstar and Alliance Atlantis Communications, both of whom competed with Craig for the license, as well as Multivan Broadcast Limited of Vancouver. Chum declined to estimate a sales price.
In addition to Toronto1, Craig has three conventional television stations in Calgary, Winnipeg and Edmonton, Alberta, that are branded A Channel; a CBC-affiliated conventional station in Brandon, Manitoba; and specialty digital nets MTV Canada, MTV2 Canada and TV Land.
Chum is the owner-operator of MuchMusic and MuchMoreMusic, and in the past it has complained to the Canadian Radio-television and Telecommunications Commission that Craig’s MTV channels were violating their conditions of license and trying to poach the Chum channels’ viewers by playing too many musicvideos. (Regulatory provisions in Canada forbid direct competition between specialty channels, and the similarity of the four channels could be another potential sticking point with regulators.)
The CRTC sided with Chum and reiterated the licensing agreement for the Craig specialties as youth channels, pronouncing them distinct and non-competing services. “Ironically, that now helps us,” said Switzer, “because these have been reconfirmed as youth channels and not music channels and makes it less of an issue for potential conflict.”
Chum will be able to provide “immediate” cost savings to Craig by providing its western channels with programming to which Chum already has national rights.
Chum brass intimated that Craig is in some immediate trouble. “This is an urgent situation, in terms of some of the pressures that Craig Media’s facing in terms of their own challenges,” said Switzer. “There is a desire to see this happen so the Craig stations can continue to go and serve their viewers.”