No clear suitor for Corus assets after report of sale: analysts

Corus Entertainment Inc. CEO Doug Murphy is refusing to comment on a media report that Shaw Communications Inc. is looking to sell its stake in Corus. “Our focus will be continue to build a very highly tuned media company in Canada,” he told the Scotiabank TMT Conference Wednesday morning. The Globe and Mail reported Tuesday evening, citing anonymous sources, that Shaw was looking to sell its stake in the broadcast and media company so it could focus on expanding its Freedom Mobile wireless network. The Shaw family has a controlling stake in both companies. The Globe said Shaw was focusing “on private equity funds and other deep-pocketed investors that don’t currently own a national media business in Canada.” Aravinda Galappatthige, analyst for Canaccord Genuity, said in a research note that the sale of Shaw’s 38-per-cent stake in Corus would essentially put the company into a “quasi strategic review process.” That could lead it to sell off some of its assets, he said. “While the radio assets could be worth $325-350M and Nelvana could be worth over $100M, we believe the sale of those assets might actually hurt rather than help the thesis for Corus as a public company,” he said. Galappatthige said that aside from selling off its two French-language channels — which Corus recently attempted to do unsuccessfully — getting rid of other services like its flagship TV channels would not make sense either. But there are also challenges when it comes to selling off the whole company, Galappatthige wrote. Not only are there rules about foreign ownership that limit potential buyers, vertically integrated Canadian companies also face regulatory limits on what they can purchase. National Bank analyst Adam Shine pointed out the timing of the report comes just after the proposed merger between AT&T Inc. and Time Warner Cable Inc. received U.S. court approval Tuesday, which is “likely set off all sorts of speculation around media and other consolidation opportunities south of the border.” That’s not necessarily the case in Canada, he said, pointing out in a research note that given the Competition Bureau killing of its attempted sale of Historia and Séries+ to BCE Inc., “the regulatory dynamic in Canada is such that no material round of media consolidation is anticipated anytime soon.” Shine said Bell and Rogers Communications Inc. won’t be making a move for any Corus assets, while Quebecor Inc. “has not declared any ambitions to acquire assets outside of Quebec and currently doesn't have the balance sheet to do so.” Other options are the Jim Pattison Group of Companies, which operates in the broadcasting space in addition to other industries, or a private equity firm such as Fairfax Financial Holdings Ltd. But Shine noted that “nobody really knows if has an appetite for all or any of the parts of Corus,” while Fairfax may not look to make a full bid for the company. “It may look to acquire Shaw's stake on the cheap and then see over time if full ownership is what it wants,” Shine said. — With reporting and editing by Bryson Masse at bmasse@thewirereport.ca and reporting by Anja Karadeglija at akarad@thewirereport.ca

No clear suitor for Corus assets after report of sale: analysts

Broadcast | June 13, 2018

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No clear suitor for Corus assets after report of sale: analysts

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