Rogers Communications Inc. may bid for the Toronto Maple Leafs hockey team and the Raptors basketball club for about C$1.3 billion ($1.28 billion), the Toronto Star reported, which would add sports programming to keep pace with competitors such as BCE Inc.
Rogers, Canada’s largest wireless carrier, is in talks to buy a 66 percent stake in Maple Leaf Sports & Entertainment Ltd. from the Ontario Teachers’ Pension Plan, the Toronto Star reported today. The purchase would include the Toronto FC soccer club, the Marlies minor-league hockey team and media ventures, the Star said.
A deal would give Toronto-based Rogers, which owns Major League Baseball’s Toronto Blue Jays, more exclusive sports content for customers.
“The sports properties do represent the kind of glue they need to keep you from straying,” said Iain Grant, managing director of research firm Seaboard Group in Montreal. “What I like about the concept is the properties are in Rogers’ core area and Ontario represents a substantial portion of Rogers’ revenue.”
Deborah Allan, a spokeswoman for Ontario Teachers’, declined to comment. Teachers’ bought an additional 7.7 percent stake in Maple Leaf Sports in August 2009, boosting its ownership to 66 percent.
BCE Adds TSN
Rogers said there is no change in its relationship with Maple Leaf Sports, according to an e-mailed statement today. Rogers has a long-standing arrangement with Maple Leaf and is “always in discussions” over sports content. The company said it can’t comment on “rumor and speculation.”
BCE, Canada’s No. 2 wireless carrier, agreed to buy Canadian broadcaster CTV for C$1.3 billion in September to add 27 television stations across the country and 30 specialty channels including the sports channel TSN. Calgary-based Shaw Communications Inc. won approval in October for its C$2 billion purchase of Canwest Global Communications Corp.’s TV assets.
Rogers dropped 10 cents to C$36.19 at 4:15 p.m. in Toronto Stock Exchange trading. The stock has gained 11 percent this year. BCE rose 49 cents to C$35.20.
The Toronto Maple Leafs franchise is the most valuable in the National Hockey League, valued at $470 million, followed by the New York Rangers, Forbes magazine reported in November 2009.
‘They Want More’
If talks are happening, “what it says is that they must be happy with the sports assets they already own, and that’s working for them, and they want more,” said Doug Davis, president of Toronto-based Davis-Rea Ltd., which manages C$400 million in assets including BCE stock, though not Rogers shares.
The transaction with Rogers would include all the sports properties owned by Maple Leaf Sports, including the Leafs and Raptors television stations, the Star said. It wouldn’t include the real-estate holdings, the Star said.
Richard Peddie, Maple Leaf Sports’ chief executive officer, declined to comment to the Star, and referred calls to Ontario Teachers’, the newspaper said. Peddie announced yesterday that he plans to step down at the end of 2011.
It’s not known whether Rogers is the only bidder or whether the pension plan intends to speak with other parties, the Star said. Kilmer Sports Inc., a firm owned by Larry Tanenbaum, owns 20.5 percent of Maple Leaf Sports, while TD Capital, a unit of Toronto-Dominion Bank, holds 13.5 percent, the paper said.
“While a deal does not appear imminent, we would not be overly surprised to see such a deal over time” given Rogers’ investment in sports and BCE’s stake in the Montreal Canadiens hockey franchise, said Dvai Ghose, an analyst at Canaccord Genuity Corp. in Toronto. He has a “hold” rating on Rogers.
Rogers could “easily” finance such a deal with C$344 million in cash and C$2.2 billion in untapped credit, he said.