New Alliance for CanWest

Lands 50% stake in 'CSI' franchise

In a deal likely to challenge Canada's foreign ownership rules, Canadian broadcaster CanWest Global Communications Corp. and partner Goldman Sachs Capital Partners unveiled Wednesday a CAN$2.3 billion ($2 billion) takeover of rival broadcaster Alliance Atlantis Communications Inc.

The offer, which will see Alliance Atlantis shareholders receive CAN$53 ($45.30) a share, will largely be financed by the Goldman Sachs private-equity arm and will hand the U.S. firm a half-stake in the popular "CSI" franchise.

"The combined expertise of CanWest and Alliance Atlantis will enable us to produce even better Canadian content, promote it more effectively and provide greater access to more viewers across more platforms," CanWest Global CEO Leonard Asper said.

Asper received backing from Michael MacMillan, executive chairman of Alliance Atlantis and the company's controlling shareholder.

"The combination of CanWest's conventional and specialty television businesses and Alliance Atlantis' 13 specialty television channels creates an excellent foundation for future growth in both businesses," said MacMillan, who will be cashing out the broadcaster he co-founded in 1978.

"We are looking forward to this relationship with CanWest to support the expansion of its television business and to facilitate the combination of two great Canadian media companies," said Gerry Cardinale, managing director of Goldman Sachs Capital Partners.

As part of the proposed deal, Winnipeg, Manitoba-based CanWest Global will contribute an initial CAN$132 million ($113 million) for an initial 17% stake in a new company that will control Alliance Atlantis' 13 cable channels and CanWest Global's two Canadian conventional TV networks.

Under arrangements yet to be finalized, CanWest Global will manage the new broadcast business "on an integrated basis," and CanWest Global and Alliance Atlantis will eventually combine their TV businesses in 2011.

At that time, the equity ownership of the combined entity will be determined by the respective EBITDA contributions of the CanWest Global and Alliance Atlantis TV businesses.

Asper said he expects CanWest Global to have about a 50% stake in the combined business in 2011, with an option to buy out Goldman Sachs after the businesses are fully integrated.

Until then, CanWest Global can invest as much as $200 million in the aligned TV businesses. That leaves Goldman Sachs on the hook for the majority of the initial CAN$2.3 billion purchase price.

Goldman Sachs will own 100% of Alliance Atlantis' 50% stake in the "CSI" franchise, which does not require CRTC approval.

CBS Prods., which owns the other 50% stake in "CSI: Crime Scene Investigation," "CSI: Miami" and "CSI: NY," will take over from Alliance Atlantis as international distributor of the franchise as part of an arrangement with Goldman Sachs.
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