Alliance posts 'for sale' sign
Lead shareholders shopping interestCanadian broadcaster Alliance Atlantis Communications, co-producer of the "CSI" franchise, put itself on the auction block Wednesday.
Toronto-based Alliance Atlantis made official what has long been known in industry circles: The company's controlling shareholders, executive chairman Michael MacMillan and longtime partner Seaton McLean, are shopping their controlling 67% voting interest in the specialty channel broadcaster via their Southhill Strategy Inc. shingle.
In a statement, Alliance Atlantis said that MacMillan and McLean have told the broadcaster that no decision to cash out has been made and that they may still decide not to unload their stake.
"If Southhill decides not to sell its interest, a sale of AACI is unlikely to occur," the company said.
Alliance Atlantis shares climbed CAN$6.50 ($5.70), or 15%, to CAN$48.70 ($42.37) in morning trading on the Toronto Stock Exchange following news of a possible sale.
To complete a potential deal, Alliance Atlantis said it has retained RBC Capital Markets as a financial adviser and Bennett Jones Llp. as its legal adviser. It also has established a special in-house committee — comprising Robert Steacy, Anthony Griffiths and Barry Reiter — to explore "strategic alternatives."
Alliance Atlantis' raising of the "for sale" sign follows MacMillan's move to executive chairman last year after being replaced as CEO by Phyllis Yaffe. And in October, the company indicated that it was seeking a buyer for its controlling stake in Canadian movie distributor Motion Picture Distribution Income Fund.
Alliance Atlantis also has used cash flow from its lucrative half-stake in the "CSI" franchise to reduce its debt load and repurchase stock.
Because the Canadian broadcast industry is heavily regulated, a domestic player is likely to buy Alliance Atlantis. Canadian law limits foreign ownership of domestic broadcasting companies to 20% direct equity investment.
Canadian media players like Alliance Atlantis manage to remain in Canadian hands by issuing class-A nonvoting shares to controlling shareholders, while allowing non-Canadians to acquire unlimited amounts of equity in the form of class-B nonvoting shares.
The long-rumored suitors for Alliance Atlantis — all controlled by majority shareholders — include cable firms Rogers Communications, Shaw Communications and Quebecor Media and private broadcasters CanWest Global Communications Corp. and Astral Media Inc.
Desjardins Securities entertainment analyst Carl Bayard said in a note to clients that CanWest Global will be a likely buyer if it carries through on announced plans to seek a possible buyer for its Australian Network Ten broadcast assets and then use the estimated $1.5 billion in proceeds to fund an Alliance Atlantis acquisition.
Bayard predicted that talks to purchase Alliance Atlantis will begin at about CAN$55 ($47.85) per share, valuing the company at about $2 billion.
The company's 13 specialty channels include some of Canada's most profitable, from Food Network Canada and HGTV Canada to Showcase Television and History Television.
If CanWest Global were to buy Alliance Atlantis, it would be following the lead of archrival CTV, which continued to diversify from conventional TV stations into specialty channels by buying rival broadcaster Chum Ltd. in July from the Waters family of Toronto.
In addition to its specialty channel revenue, Alliance Atlantis is projecting revenue from its "CSI" franchise, including bonus payments from CBS based on ratings, well into the future.