Bell Globemedia made a friendly takeover bid worth $1.7 billion to buy the Toronto-based radio and TV broadcaster CHUM Ltd., hours afterCHUM cut 281 jobs across the country.
Bell Globemedia said Wednesday afternoon that it is offering $52.50 in cash for each common share and $47.25 for each class B non-voting share of CHUM.
CHUM — which operates 33 radio stations, 12 local television stations and 21 specialty television channels — has endorsed the deal with Bell Globemedia, which owns the 21-station CTV television network, 17 specialty television channels, the Globe and Mail newspaper, and several digital TV channels and internet websites.
The estate of the late CHUM founder, Allan Waters, agreed to support the bid.
"In Bell Globemedia's offer, we not only found value for shareholders, but confidence that we would be placing CHUM in the hands of an owner with the financial resources and track record to continue to grow and build on our collective legacy," said his sonJim Waters, the chairman of CHUM.
The Waters estate owns 88.6 per cent of the company's common shares. CHUM and the Waters estate can accept a higher offer from another bidder, but they have agreed to pay $41-million breakup fee to Bell Globemedia in that case.
News divisions to stay 'separate'
The deal issubject toapproval of regulators, including the Canadian Radio-television and Telecommunications Commission.
"With regulatory approval, we intend to serve Canadian audiences with both CTV and Citytv stations," said Ivan Fecan, the CEO of Bell Globemedia and CTV.
"We will maintain separate and independent news divisions in order to ensure a continued diversity and competition in news coverage."
Bell Globemedia said it expects to sell CHUM'sA-Channel and Access Alberta television stations.
Trading in CHUM stock was halted before the opening of the stock market on Wednesday. On Tuesday, CHUM's class B shares gained $1.25to close at$31.25. Shares of BCE Inc., which currently owns 68.5 per cent of Bell Globemedia, slipped 18 cents to finish at $26.23.
Cuts to jobs, local programming
Even before the takeover deal was announced, CHUM told its employees that it was cutting jobs across the country.
CHUM said it was eliminating 281 full-time and part-time jobs across the country, while cutting or condensing much local news programming.
"After years of absorbing losses, CHUM has requested each station restructure their operations to provide the most relevant local programming possible, while at the same time bringing expenses in line with revenue," the company said in the memo.
The layoff notices came just before CHUM announced its third-quarter earnings slipped and revenues were up slightly.
The company said it made $22.5 million (80 cents a share) on revenue of $176.2 million. That compares with a profit of $23.4 million (83 cents a share) on revenue of $175.5 million a year earlier.
CHUM holdings include Citytv, MuchMusic, Bravo
CHUM's TV stations currently include:
- Citytv outlets in Toronto, Vancouver, Calgary, Edmonton and Winnipeg.
- A-Channel stations in Barrie, Ottawa, London, Windsor, Wingham, Victoria/Vancouver.
- CKX Television in Brandon.
CHUM's specialty television channels include MuchMusic, MuchMoreMusic, Bravo!, ACCESS, CLT, CablePulse24, SPACE: The Imagination Station, Star! and half interests in MusiquePlus and MusiMax.
The company's digital channels include BookTelevision, CourtTV Canada, Drive-In Classics, FashionTelevisionChannel, MuchLOUD, MuchMoreRetro, MuchVibe, PunchMuch, Razer, SexTV: The Channel and TV Land.
After the CHUM founder died in December 2005 at the age of 84, Jim Waters said the company wasn't for sale. But he said at the time that hehad a duty to shareholders to examine any offers if they came forward.
Earlier Bell Globemedia deal awaits approval
BCE Inc. owns 68.5 per cent of Bell Globemedia, while the Thomson family's Woodbridge holding company owns the remainder.
In December 2005, BCE unveiled plans to sell 8.5 per cent of Bell Globemedia to Woodbridge, and 20 per cent each to Torstar Corp. and Ontario Teachers' Pension Plan.
That deal, which is slated to close in the third quarter of this year, still requires regulatory approval.