CALGARY — Shaw Communications is selling its media division to Corus Entertainment for $2.65 billion — a deal that will help fund the telecom company's purchase of Wind Mobile.
Shaw Media includes the Global Television network and 19 specialty channels including HGTV Canada, Food Network Canada and Showcase — formerly part of the Canwest business group before it was split up.
Corus already owns a number of other specialty TV channels as well as a network of radio stations and the Nelvana animation studio.
Both companies are controlled by the Shaw family through its voting shares. Shaw Communications will become a large shareholder in Corus as a result of the deal, which involves both cash and shares.
"Through this transaction we are able to crystalize an attractive value for Shaw Media and realize substantial value creation for Shaw shareholders since acquiring CanWest in 2010," said Shaw director Paul Pew, chair of a special board committee.
Shaw Communications chief executive Brad Shaw added that "we are grateful to our colleagues at Shaw Media for their contributions to Shaw's success over the past five years . . ."
It's the second major deal for Shaw Communications (TSX:SJR.B) in recent weeks. The Calgary-based cable, Internet and satellite TV company announced on Dec. 16 that it's buying Wind Mobile in a deal worth $1.6 billion.
The sale of Shaw Media to Toronto-based Corus will move about $1.85 billion in cash to Shaw Communications, which will also receive about 71 million Corus non-voting class B shares (TSX:CJR.B).
After the deal closes, Shaw Communications will own about 39 per cent of the equity in Corus, including both class A and B shares, but focus its own business on communications infrastructure rather than media content.
"With the previously announced acquisition of Wind and sale of Shaw Media, Shaw will be focused on delivering consumer and small business broadband communications supported by its best-in-class wireline, WiFi and wireless infrastructure," Brad Shaw said in a joint statement.
Corus CEO Doug Murphy said the purchase of Shaw Media "positions the combined business as one of Canada's leading media and content companies with significantly enhanced scale and growth prospects going forward."
The Shaw Media deal is subject to approval by Corus shareholders, including those with non-voting shares not hold by interested parties. It is expected to close by the end of Shaw's third quarter ending May 31. The Wind deal is also expected to be closed by about the same time.
Corus announced separately Wednesday that its revenue for the first quarter of fiscal 2016 was $228.3 million, up from $228.1 million a year earlier. The increase was mainly due to its television division, which offset a decline in radio. Total net income was $41.3 million, down from 51.9 million in the comparable period.
FIVE THINGS TO KNOW ABOUT SHAW'S DEAL TO SELL MEDIA DIVISION TO CORUS ENTERTAINMENT
TORONTO — Shaw Communications has announced it is selling its media division to Corus Entertainment for $2.65 billion. The combined company would own the Global Television Network, specialty channels including Showcase and DejaView, and the Canadian versions of international channels such as the Food Network, BBC Canada and HGTV. Here are five things to know about the deal:
Why is this deal happening?
Shaw says it wants to sell its media assets in order to concentrate on its cable, fibre-optic and wireless networks. The deal would also help fund the company's $1.6 billion purchase of upstart wireless carrier Wind Mobile, announced in December. Selling its media division puts Shaw's focus squarely on the networks that underlie its Internet, television, home phone and mobile services.
How big is this deal?
The combined company would have a comparable share of English TV viewership to Bell, with each of them accounting for slightly more than a third of what Canadians watch on television. Corus would own the top six highest-rated specialty channels among women, as well as highly rated children's entertainment including the Disney channels and Nickelodeon.
What difference will it make for TV viewers?
The deal should have little impact for viewers, at least in the short term. Despite the multibillion-dollar price tag, the agreement doesn't actually change much about Shaw Media's ownership. The Shaw family, which controls Shaw Media's parent company, is also the controlling shareholder in Corus, which was spun off from Shaw Communications in 1999. The deal essentially consolidates Shaw's various media properties under the Corus umbrella.
Is pick and pay a factor?
Beginning in March, TV customers will be able to pick individual channels to add to their subscriptions on an a la carte basis, or in small packages that they design themselves. That could mean a lot less revenue for the less popular specialty channels, which have until now been supported by their inclusion in packaged bundles from the TV providers. With Corus taking 19 specialty channels off Shaw's hands, Shaw gains more certainty about its future revenues.
Are there media concentration concerns?
Corus executives say that because the deal doesn't involve a change in ownership, they don't anticipate any issues with the CRTC, the Competition Bureau or the federal government. All three authorities have various powers they can use to block deals if they feel such agreements would unduly concentrate media power or harm consumers.
