Shaw, Corus Merger Speculation Renewed with TVtropolis deal

8:00 AM PST 01/15/2013 by Etan Vlessing

The cable channel minority stake purchase was part of a wide-ranging series of agreements between cable giants Rogers Communications and Shaw Communications.

TORONTO - Canadian cable giant Shaw Communications has moved closer to potentially acquiring affiliated indie broadcaster Corus Entertainment after it purchased the remaining third of the cable channel TVtropolis that it does not already own.

As part of a wide-ranging deal with rival Rogers Communications, Calgary-based Shaw paid Toronto-based $59 million for a 33.3 percent stake in TVtropolis.

Rogers in turn paid around $700 million to acquire a Hamilton, Ontario-based cable system from Shaw, Mountain Cablevision, and AWS mobile spectrum holdings as Shaw abandons plans to launch a wireless phone network.

The TVtropolis deal gives Shaw 100 percent control of the Canadian cable channel, and moves the family-controlled cable group closer to possibly making a bid for the remaining stake in Corus Entertainment that it does not already own.

The Calgary-based Shaw family controls Corus Entertainment through its majority ownership of Corus' class A voting shares.

Shaw Communications, which is also controlled by the Shaw family, has no ownership stake in Corus.

"While these transactions do not directly involve Corus Entertainment, we expect improved visibility around Shaw’s wireless strategy, a stronger balance sheet and an increase in media exposure with full ownership of TVtropolis to put a potential Shaw-Corus combination back in the spotlight,” RBC analyst Drew McReynolds said Tuesday in an investors note.

The Shaw family a decade ago spun-off Corus Entertainment into a publicly-listed company, while still remaining majority control.

The cable group has down-played repeated speculation that it will look to combine the affiliated companies, a transaction that could be complicated by the CRTC recently thwarting an initial bid by phone giant BCE for another indie media group, Astral Media.

"Strategically, when the family feels its right to do it, we’ll look at it,” Brad Shaw, CEO of Shaw Communications, told financial analysts in October 2012 when asked about merger speculation surrounding Shaw and his company.

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