Rogers to pay $137.5M for select CHUM assets

CTV globemedia may have finally found a way around a thorny problem looming over its proposed acquisition of CHUM Ltd.: too many stations in select markets. Today, Rogers Communications Inc. announced it will pay $137.5 million in cash for 10 of CHUM's television assets, both conventional and specialty.The services being acquired by Rogers include all six of CHUM's A-Channels as well as another conventional over-the-air broadcaster, CKX Television in Brandon MB. Rogers will also acquire two educational TV services - Access Alberta, formerly a publicly funded provincial broadcaster, and Canadian Learning Television, a national service - as well as the SexTV specialty channel.Alain Strati, VP of business and regulatory affairs at Rogers, says the fit between the A-Channel properties and Rogers' existing OMNI chain of over-the-air stations will lead to operating efficiencies. "There's an interest both in additional television stations and in additional specialty services, because you...establish distribution and scale for Canadian programming, and also for the acquisition of foreign programming," he says.But Friends of Canadian Broadcasting spokesman Ian Morrison believes the A-Channel stations aren't the true target of the deal for Rogers. "What I think they're purchasing today is probably a right of first refusal, the CRTC doesn't roll over and play dead," he says.Morrison says it's possible the CRTC will order CTV globemedia to dispose of CHUM's marquee CityTV assets - rather than the somewhat less desirable A-Channel stations - before the acquisition of CHUM can proceed. By stepping in now as an interested suitor for the A-Channel chain, Rogers may be positioning itself at the head of the line to gain an edge on other prospective buyers of CityTV - which might include Astral Media Inc. or Corus Entertainment Inc. - should that scenario come to pass.With CTV globemedia also standing to acquire CHUM Radio's vast empire as well as 21 other CHUM specialty channels - giving the new entity nearly 40% of all the specialty channel revenues in Canada - the commission may be concerned that too much power will be concentrated in the hands of CTV globemedia. Those concerns, Morrison observes, give rise to the prospect of a CityTV sale.In support of that hypothesis, Morrison says he has information that the 10 properties Rogers plans to acquire are ailing, and that the cable and media company has been able to sign the deal at "a bargain basement price" because no other buyers for the assets have emerged. "The information I have is that as a group they are not profitable, they are rather fragile," he says.But with the recent bid by CanWest Global Communications Corp. for Alliance Atlantis Communications Inc. underlining the need for conventional broadcasters to branch out into specialty channels, Strati says the $137.5-million price tag fairly values the properties, which are admittedly mixed in terms of financial performance."I think there are some strong assets that are performing well financially, and others...you know, over the air television has been the last little while a difficult industry," Strati notes, adding that he believes the discipline and focus Rogers has applied to the OMNI stations will also work in favour of the A-Channels.A CRTC hearing into the proposed acquisition will begin April 30, and today's proposed deal is wholly contingent on the outcome of that hearing. A review of the commission's ownership policy for television licensees was originally planned as part of the hearing, but last month was carved off as a separate proceeding to be held sometime this fall.Morrison, however, says it makes sense to handle the CHUM/CTV merger application and the deliberations around crafting a new ownership policy quite separately. "You shouldn't be making a fact decision based on a policy when you're reviewing the policy at the same time," he says.

Rogers to pay $137.5M for select CHUM assets

News | 04/09/2007 1:51 pm EDT

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