Shaw Comms. to control Canwest Global
EmptyTORONTO -- In a move that confirms cable's increasing dominance of Canadian TV, local cable giant Shaw Communications is to acquire a controlling stake in restructuring broadcaster Canwest Global Communications Corp.
Terms of the landmark deal were not disclosed, and must be approved by an Ontario court now supervising Canwest Global's passage through creditor protection.
But the proposed transaction would see Calgary-based Shaw grab at least 20% of Canwest's equity and 80% of its voting stock after the broadcaster and newspaper publisher pays off its creditors and emerges from its court-directed restructuring.
"We are excited about the investment and gaining effective control of one of the premier broadcasters and owners of content in the Canadian broadcasting industry at a reasonable valuation," Shaw Communications CEO Jim Shaw said in a statement.
Winnipeg-based Canwest Global in its own statement Friday morning confirmed the agreement with Shaw on its equity investment, and added: "We look forward to benefitting from Shaw's participation in a reinvigorated Canwest, as it is a strong business partner with a proven commitment to the Canadian television broadcasting industry."
"This significant investment in conventional television should be seen as a big vote of confidence in the industry and its future," Canwest Global added.
Shaw, which already has in Corus Entertainment a major cable and pay TV channel operator, will seize control of Global Television, the country's second largest broadcast network, and a stable of cable channels.
Shaw's Corus division in recent months has made it clear it covets certain cable channels, including HGTV Canada, that Canwest Global operates in partnership with U.S. investment bank Goldman Sachs & Co.
The expansion by Shaw into broadcasting follows rival cable and mobile phone giant Rogers Communications building out its own broadcast network, anchored by its Citytv-branded local TV stations.
Canwest Global also owns a stable of national newspapers, but that print division is expected to be sold off by creditors as the broadcaster looks to get out from under a crippling debt load.
To do the investment deal, Shaw said it signed agreements with Canwest Global and a consortium of U.S. bondholders that remain in the driving seat as the Canadian company recapitalizes.
The cablecaster added that its initial equity stake will exceed 20%, contingent on how many U.S. bondholders and other creditors choose cash rather than shares in a restructured Canwest Global.
Besides court and creditor approval, Shaw must also secure permission for its investment from the Canadian Radio-television and Telecommunications Commission, Canada's TV regulator.