Source : Globe & Mail

Canada's next big media deal may require the busting up of a large broadcaster to make it happen, now that the federal broadcast regulator has changed media ownership rules.

New restrictions on media ownership unveiled this week by the Canadian Radio-television and Telecommunications Commission likely mean that the days of one large broadcaster taking over a major rival in a single deal are gone.

Instead, it's more likely that two or three companies will have to team up on large deals in the future, dividing the assets between themselves.

Should Shaw Communications Inc. ever decide to sell its majority stake in radio-and-TV broadcaster Corus Entertainment Inc., for example, those assets would have a hard time finding a single owner.

Corus is coveted by a variety of broadcasters for its specialty TV assets, including YTV, Teletoon and Treehouse, and a network of 52 radio stations. Although Shaw has stated it has no intention to sell Corus, analysts say the hypothetical sale of the broadcaster is a case study of how complex future takeovers could be.

A new restriction preventing media companies from owning more than two of the three local media disciplines in one market - radio, TV and newspaper - prevents CanWest from buying Corus without selling the radio stations.

As well, another new rule preventing broadcasters from holding more than 45 per cent of the TV audience in either English or French would prevent CTV from buying Corus.

CTV and its cable channels, which include TSN, Bravo, MTV, have 37.4 per cent of the English TV audience, while Corus holds 9.1 per cent, according to the CRTC's figures.

"It would be very difficult for CanWest to obtain CRTC consent to acquire Corus Entertainment," analyst Carl Bayard of Genuity Capital Markets said in a note yesterday.

Astral Media Inc., long considered a suitor for Corus, may run afoul of rules that are already in place that limit radio broadcasters to a maximum of two FM and two AM stations in any one market for each language.

After buying Standard Broadcasting Ltd. last year for $1.08-billion, Astral now has 81 stations across the country and would likely face regulatory hurdles in some cities.

Other analysts pointed out problems if any of Canada's large broadcasters wanted to buy Torstar Corp., should the newspaper company ever go on the block.

"These new rules could potentially impact Torstar and Corus, as it will limit the number of potential suitors, assuming these companies considered selling in the future," analyst Eric Mencke at UBS Securities Canada Inc. said in a research note.

© Globe and Mail

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