Source : Canadian Press

TORONTO (CP) - Alliance Atlantis Communications Inc. (TSX:AAC.B) confirmed a months-long rumour Wednesday that it is in exclusive negotiations to be bought by CanWest Global Communications Corp. (TSX:CGS) and Goldman Sachs Capital.

Discussions toward a sale, which has an estimated value of $2.1 billion, also involve Southhill Strategy Inc., Alliance's controlling shareholder owned by chairman Michael MacMillan and investor Seaton McLean.

CanWest and Alliance provided little detail about any possible deal, saying "there can be no assurance that these discussions will result in a definitive agreement."

The broadcast division of CanWest will hold an earnings conference call late Wednesday.

Last week Alliance, one of Canada's largest TV entertainment companies, said it was in discussions over a deal but would not confirm speculation about which players were involved, despite reports that CanWest and Goldman had formed a partnership to buy Alliance's 13 specialty television channels.

Goldman's private-equity group was reportedly interested in either an outright purchase of Alliance's 50 per cent interest in the lucrative "CSI" crime-drama TV franchise, or a loan to CanWest backed by the "CSI" stake.

On Wednesday, industry watchers suggested that despite the special negotiations, there could a possible spoiler in stakeholders' fears that the Canadian Radio-television and Telecommunications Commission could step in and block the sale or demand changes.

"If Alliance Atlantis controlling shareholders have a concern that the transaction might not fly, then that casts a little shadow over the value of any offer they accept," said Ian Morrison, spokesman for the lobby group Friends of Canadian Broadcasting.

He pointed to Montreal-based Astral Media Inc. (TSX:ACM.A) as a likely bidder because of its failed attempt to buy CHUM Ltd. last year. He said the company has been looking to expand outside of its mostly French-language holdings and would "probably pose very few regulatory hurdles."

The chances of that happening are still unclear, since Alliance hasn't revealed how long the closed-door talks with CanWest will last.

Calls to Astral Media were not returned on Wednesday.

The list of prospective buyers has been shrinking over the past few days. Some analysts have suggested Rogers Communications Inc. (TSX:RCI.B) could sneak in to make a bid on Alliance is slim simply because they own cable holdings that would set off alarms for Canadian regulators who would move to reject the agreement.

Corus Entertainment Inc. (TSX:CJR.B) also seems to be out of the game, though not officially, after CEO John Cassaday said the sale, "appears (to be) going in a different direction."

He added that the specialty TV and radio company continued to be "highly interested" in Alliance.

CanWest's interest in Alliance has been talked about in the media for months. The firm was formally put up for sale in December.

CanWest Global Communications owns the Global Television Network and operates or holds substantial interests in Canada's largest publisher of daily newspapers. On Wednesday afternoon it's shares traded at down four cents to $10.36 on the Toronto Stock Exchange.

Alliance Atlantis offers Canadians 13 specialty channels, co-produces and distributes the hit CSI franchise and indirectly holds a 51 per cent limited partnership interest in Motion Picture Distribution. Alliance shares were down 14 cents to $53.36.

© Canadian Press