Corus Deal Lets Shaw Family Rearrange Assets in Market Shift

  • Shaw selling media unit to Corus seen as win for both
  • Deal comes as advertising shrinks and regulatory changes loom

Shaw Communications Inc.’s C$2.65 billion ($1.86 billion) deal to sell its media unit to Corus Entertainment Inc. lets one of Canada’s wealthiest families to rearrange its assets to better cope with the quickly changing world of media and the Internet.

Corus agreed to buy all of Shaw’s media properties, including Global Television and channels such as Food Network Canada, HGTV Canada and Lifetime. The sale allows Shaw to pay off its recent C$1.6 billion acquisition of wireless carrier Wind Mobile. Both companies are controlled by members of the Shaw family, who originally created Corus by spinning some media assets out of Shaw in 1999.

Essentially, the deal consolidates all of the Shaw family’s content creation and ownership assets into Corus, while allowing Shaw Communications to focus on building out better infrastructure to deliver faster Internet, cable and wireless services.

Multiple Advantages

The deal benefits both companies, said Greg MacDonald, a Toronto-based analyst at Macquarie Group Ltd. Bulking up puts Corus in a better position to manage regulatory changes in Canada that will force cable companies to offer channels to consumers on a pick-and-pay basis rather than in structured bundles, he said. And Corus will be able to charge advertisers more by selling them a broader range of distribution channels, Chief Executive Officer Doug Murphy said in an interview on Bloomberg TV Canada.

“We are now so much better able to compete and steal share from the competition,” Murphy said. “The intention for this for Corus was to gain scale to compete in this very competitive media environment and to win given the landscape shifts with regulatory and digital.”

At the same time, Shaw gets out of broadcasting as more people turn to Internet-delivered TV providers like Netflix Inc. and Google’s YouTube.

For wireless carriers, “there is no strategic benefit or synergistic benefit from combining conduit and content,” MacDonald said.

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