Shaw planning to keep Corus Entertainment assets separate from its newest properties

Source: Toronto Star

CanWest Global Communications Corp.'s agreement with Shaw Communications for a stake in CanWest's television operations leaves significant assets of both companies on the sidelines.

On CanWest's side, the future of its newspaper operations, which are currently on the auction block, remains uncertain, as it is not part of the agreement with Shaw.

And on Shaw's side of the deal, one of its prized television assets – Corus Entertainment – won't be a player in the CanWest television interests that Shaw is gaining.

Shaw's investment in CanWest's television assets would give it no stake in the company's 11 big-city daily newspapers, which are in a separate corporate unit, CanWest LP.

Like the television operations, CanWest LP is under bankruptcy court protection from creditors.

CanWest Global has put the big-daily newspapers up for sale, with the secured creditors placing an opening bid of $950 million – the amount they are owed.

The hope is that their bid will stir offers from other buyers in the range of $1 billion to $1.5 billion.

CanWest says it will give preference to bids for the daily newspapers as a package.

But a group led by former senator Jerry Grafstein said last month it wants to bid for just three of the papers: The Gazette in Montreal, the Ottawa Citizen and the National Post. Another group may be considering a bid for the Edmonton Journal and Calgary Herald.

Analysts are uncertain whether the papers are worth more as a group, or in parts.

As for Shaw, it will keep Corus Entertainment, which is controlled by the Shaw family, away from the transaction, according to CanWest spokesman John Douglas.

While CanWest's newspapers remain on the sidelines, Corus won't take part in the CanWest transaction, Douglas said.

"The agreement specifically excludes Corus from investing or participating," Douglas said. When asked why, he wouldn't elaborate.

Corus was constructed of assets originally owned by Shaw, but spun off as a separate company in 1999.

The Shaw family has voting control of Corus.

Ian Morrison, spokesman for independent watchdog Friends of Canadian Broadcasting, said Shaw may be worried about the appearance of amassing too many specialty channels.

Keeping Corus kept at arm's length from the Shaw investment might be a strategy to keep the Canadian Radio-television and Telecommunications Commission from intervening, he said.

But Morrison said from his viewpoint, the concentration of specialty channels that could result from the arrangement "is a matter of legitimate concern" for the federal broadcast regulator.

On the positive side, Morrison said, CanWest's television properties would end up in the hands of "a robust, well-financed profitable company that would be capable of being a strong Canadian broadcaster."

© Toronto Star