CTV owner to buy CHUM for $1.7B
TORONTO (CP) – Canada’s broadcasting industry is set to undergo a seismic shift, with the owner of CTV Inc. preparing to buy CHUM Ltd. in a $1.7-billion deal that has the potential to reshape the country’s media landscape.
The friendly takeover offer was announced Wednesday by Bell Globemedia, which in addition to the main CTV network also owns The Globe and Mail newspaper, local conventional television stations and national specialty TV channels.
The bid coincided with the release of CHUM’s latest financial results and announcement of plans to cut 281 positions at TV stations across the country – part of an efficiency drive company management has been working on for months.
Critics of media concentration were quick to lament the loss of so many jobs and the impact the takeover would have on the diversity of news and information sources in Canada.
But Bell Globemedia president and chief executive, Ivan Fecan, said in an interview that news operations at CTV and CHUM will remain independent.
“We’ll have two separate news organizations, one at CTV and one in Citytv, and they won’t report to each other in any way,” Fecan said. “I don’t think there’s any upside in having them being the same. You actually want them to be different because they have different approaches.
“As well, we’re going to do everything we can to maintain the energy and irreverence of the Citytv brand.”
But the repercussions of the buyout could represent another blow to local journalism, which has been eroded over the past decade by private-sector mergers in print and broadcasting and cuts to the CBC.
“It seems to me that no matter how you look at it, it’s going to mean that there will be fewer journalists involved in television coverage at the local level in many of our major cities, and it’s started already,” said Peter Desbarats, former dean of the journalism program at the University of Western Ontario.
“That’s a serious development because it comes on top of a real deterioration of the daily newspaper in many of those same cities.”
A combination of CHUM with Bell Globemedia would face the scrutiny of the Canadian Radio-television and Telecommunications Commission.
Fecan also suggested that the another media company could buy some of the CHUM A-channel and Access television stations that Bell Globemedia plans to sell and use them to create a third private-sector national network in addition to CTV and CanWest’s Global Television.
“Because that will give a new player three big markets – Ontario, Vancouver-Victoria and Alberta. So I think there’s a real opportunity for a new player to join into that was well as we divest those stations.”
Although Fecan said it’s too soon to identify a potential buyer, he noted that Montreal-based Quebecor Inc. and Toronto-based Rogers Communications already have major print and broadcast assets in some parts of the country.
Union leader Peter Murdoch warned, however, that the layoffs announced Wednesday by CHUM hit the parts of its operations that cover hard news, such as local politics and crime.
“It’s that kind of hard news which tends to be more challenging to administration and to the interests of the public than what your local hockey hero has done,” Murdoch said.
Murdoch, a vice-president of the Communications, Energy and Paperworkers union which has 2,000 members at Bell Globemedia and CHUM operations, said the proposed takeover should be stopped in the public interest.
He laughed when told of Fecan’s suggestion that a third national TV network could emerge, saying: “We had another national network that was building and that was CHUM. I don’t understand that logic. But I think it’s going to be a serious question for both the regulator and for government.”
The federal Liberal consumer affairs critic agreed.
“The absolute breadth of the dominance of this takeover would mean that there are very few players left, short of ones that fall under CBC-type establishments – CanWest would be the only effective rival,” said Dan McTeague.
“Based on what is already a staggering level of concentration in old and new media in Canada to begin with. . . I think this particular proposal does little to give any measure of comfort to those of us who are already alarmed at the level of concentration in media in Canada.”
Jay Switzer, CHUM’s chief executive officer, told analysts in a conference call that joining Bell Globemedia will provide financial strength in “what is a rapidly changing media landscape.”
Switzer said the job cuts are part of an initiative CHUM has been working on for months as it redeploys its resources “to areas where we can win.”
Although CHUM remained profitable in its most recent quarter, albeit slightly less so than a year ago, the company maintains it faces tough market conditions for the later part of this year and in the longer term.
CHUM will increase local programming in certain areas, such as its Breakfast Television morning shows across the country, while reducing overhead in other parts of its news and information operations.
“We believe it’s absolutely the right thing to do in terms of putting our resources where we can make a difference locally and it’s where our advantage historically has been,” Switzer said.
CHUM said it plans to cut 191 full-time and 90 part-time positions across the country as it undergoes a complete reorganization of its TV operations to “increase focus on service to local viewers.”
The moves include switching Citytv stations in Calgary, Edmonton and Winnipeg from one-hour evening newscasts to a daily half-hour local news magazine show.
In addition, a morning show at a CHUM-owned A-channel station in Victoria will be discontinued. Citytv Vancouver will cease its traditional newscasts and add resources to Breakfast Television.
Before trading was halted on the Toronto Stock Exchange ahead of the announcement, CHUM had a market valuation of $904.3 million, with the non-voting shares worth $31.25 each and the voting stock at $35.
Bell Globemedia, currently majority owned by BCE Inc., is offering a premium of about 50 per cent above the pre-announcement market prices for the shares.
Apart from the conventional television stations, there is little direct overlap in the two companies’ holdings.
CHUM owns 33 radio stations and 12 local television stations headed by the Citytv channels in Toronto, Vancouver, Calgary, Edmonton and Winnipeg. It also has 21 specialty TV channels including MuchMusic, Space and Bravo, and runs the Muzak background-music operation in Canada.
Bell Globemedia is 68.5 per cent owned by BCE, parent company of Bell Canada, with the remainder held by the Thomson family’s Woodbridge private holding company.
BCE said in December it would sell 8.5 per cent to Woodbridge, raising the Thomson ownership to 40 per cent, 20 per cent to Torstar Corp. and 20 per cent to the Ontario Teachers’ Pension Plan, with BCE retaining 20 per cent. This ownership shift awaits regulatory approval.
Under the deal, CHUM can accept a superior proposal if Bell Globemedia declines to match the offer, subject to break fee of $41 million.
To those who already lost their jobs, I wish you well! To the rest of us, this is going to be horrible for us all!!
CTV owner to buy CHUM for $1.7B