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 Bell Globemedia and CHUM Ltd. announced a $1.7 billion pending takeover that would add television stations such as CITY-TV and MuchMusic to Bell Globemedia's already hefty media stable. Almost 300 jobs nationwide will be cut. (Dave Abel, SUN) |
TORONTO - CHUM Ltd. is set become corporate pals with broadcast behemoth Bell Globemedia in a friendly takeover deal worth $1.7 billion.
Yesterday the two firms jointly announced that Bell Globemedia was offering a hefty premium to buy out the outstanding shares of CHUM Ltd.
CHUM owns 33 radio stations and 12 local television stations, headed by CITY-TV channels in Toronto, Vancouver, Calgary, Edmonton and Winnipeg. It also has 21 specialty TV channels including MuchMusic, Space and Bravo.
Bell Globemedia owns the CTV network and the Globe and Mail, as well as 17 specialty channels including TSN, MTV Canada, Report on Business Television and Discovery Channel.
The estate of CHUM Ltd. founder Allan Waters -- which controls about 88.6% of CHUM common shares -- has agreed to sell its stake to Bell Globemedia.
The deal is a bonanza for shareholders, who are being offered a premium of 50% to 57% on the 10-day average price of CHUM stock, depending on the class of share owned.
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However, it will mean significant cuts across the CHUM chain, with 191 full-time and 90 part-time employees being axed at TV stations outside of Toronto as part of a major restructuring to save $12.2 million next year.
"It wasn't just a draconian cost-reduction exercise," said Jay Switzer, President and CEO of CHUM Ltd. "This is about CHUM Ltd. being more relevant in the local communities that it serves."
CITY-TV Vancouver will discontinue its traditional newscasts and CITY-TV stations in Calgary, Edmonton and Winnipeg will trim their one-hour local newscasts down to half-hour shows.
A-channel in Ottawa will discontinue its noon news show.
Toronto's CITY-TV station will continue its newscasts at 6 p.m. and 11 p.m.
A CITY-TV staffer who did not wish to be named said the announcement caught staffers by surprise.
"You could hear jaws dropping on the floor," said the employee. "It came as a shock to just about everyone."
The deal is subject to regulatory approval. CRTC spokesman Denis Carmel couldn't say how long it would take to review the transaction.
He said that the CRTC has a policy of not allowing a broadcaster to own more than one TV station in a market, but noted that there have been exceptions in the past.
Bell Globemedia said it expects to sell the A-Channel and Access Alberta stations to reduce its TV ownership concentration.