CTV paying $1.7b for CHUM Ltd., 281 jobs to be cut
(I hope this doesn't mean the end to City TV.
)
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.
The friendly takeover offer was announced yesterday 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 television channels.
The deal coincided with the release of CHUM Ltd.'s latest financial results and its plans to cut 281 positions at television stations across the country -- part of an efficiency drive its management has been working on for months.
Although CHUM Ltd. 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 rest of this year and in the longer term.
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.
Jay Switzer, CHUM's chief executive officer, said 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 to redeploy resources "to areas where we can win."
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 told analysts in a conference call.
CHUM said it plans to cut 191 full-time and 90 part-time positions across the country in a complete reorganization of its television operations to "increase focus on service to local viewers."
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, majority owned by BCE Inc., is offering a premium of about 50 per cent above the pre-announcement market prices for the shares.
"We are able to make this premium offer because Bell Globemedia is clearly the most logical buyer of CHUM," said BGM president and CEO Ivan Fecan. "There is a unique strategic fit to our operations that can make the united company a stronger national champion in broadcasting. We intend to maintain and build the valuable CHUM brands and develop more opportunities for Canadian programming."
Bell Globemedia also announced plans to divest some of the Alberta television stations it will acquire from CHUM, a move calculated to win the necessary approval of the Canadian Radio-television and Telecommunications Commission.
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.
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