MONTREAL - An era of Canadian broadcasting consolidation may be drawing to a conclusion with a deal by Astral Media Inc. to take over Standard Radio Inc. and become the country's largest radio broadcaster with stations in major cities across the country.
Astral said Thursday it is paying $1.08 billion in cash and stock to the Slaight family for privately held Standard Radio's 52 stations in five provinces, which include such iconic outlets as CFRB in Toronto and CHOM in Montreal.
"Today we are announcing the birth of a new national leader in Canadian radio,'' declared Astral CEO Ian Greenberg.
He said the combination is a perfect strategic fit that accomplishes Montreal-based Astral's aim to expand outside Quebec and Atlantic Canada, where it owns 29 stations.
It also improves Astral's balance of revenues among radio, television and outdoor advertising.
"We think that we'll now have a national platform of radio stations across the country operating in every major market in this country; that will give us synergistic opportunities,'' Greenberg said, though no job cuts are planned.
He said earnings should increase by boosting revenues from national advertisers without resorting to cost cutting.
Standard has more than 1,000 employees, compared with nearly 2,000 at Astral, which is active in specialty, pay and pay-per-view TV as well as radio, billboards and the Internet.
The merger was decried as a "dangerous concentration of Canada's media'' by the Communications, Energy and Paperworkers Union.
"These are public airwaves. Broadcasters earn enormous profits but average Canadians are losing out,'' stated union vice-president Peter Murdoch.
"Both government and the CRTC have become muted by corporate media power.''
An industry analyst said that with the Astral-Standard deal, the most obvious media combinations have been made.
"I don't think it changes the broadcasting landscape that much,'' said the analyst, who didn't want to be named.
"I think it will hopefully be good for the radio industry because with larger players it will be easier for advertisers in general to use the medium.''
Standard Broadcasting CEO Gary Slaight will join Astral Media's board of directors, and his family will own 8.7 per cent of the company's non-voting stock.
The sale of the business -- bought from one of Conrad Black's companies in 1987 by Allan Slaight, the CEO's father -- was telegraphed last year when Standard said it was considering rolling out part of the business as an income trust.
This was called off in June due to "market conditions,'' but it wasn't long before reports pegged Astral as a likely buyer.
The deal includes Integrated Media Sales, a national advertising sales company; Sound Source Networks, a radio service provider; and two CBC television affiliates in northern British Columbia.
The enlarged Astral Media will become a "powerhouse in the Canadian radio landscape,'' Greenberg told analysts. It will own market share exceeding 30 per cent, spread across key markets.
With $328 million in annual revenues, the company takes over from Corus as the top radio revenue generator in Canada. A recent study suggested radio advertising is expected to grow by five per cent annually until 2010.
Astral expects the transaction to add $210 million in revenues and raise earnings per share by nine per cent.
The acquisition is part of a wave of media mergers recently completed or proposed.
CanWest Global Communications Corp. and a Wall Street investment bank have struck a $2.3-billion deal to acquire Alliance Atlantis Communications Corp., a specialty TV broadcaster.
CTVglobemedia Inc., owner of the CTV network, is seeking regulatory approval to acquire broadcaster CHUM Ltd. in a $1.7-billion deal.
The Canadian Radio-television and Telecommunications Commission will review all the planned takeovers, which could lead to new federal policies on consolidation.
The Standard Radio purchase price is made up of $880 million in cash and 4.75 million class A non-voting shares of Astral Media. It is expected to close early next year, subject to regulatory approval.
Although both companies operate in Quebec, Astral doesn't believe it will be forced by the CRTC to sell assets because its French-language radio stations do not compete with Standard's English-language stations.
Astral chief financial officer Claude Gagnon said the firm expects to incur $750 million in debt, but Greenberg said Astral has no plans to dispose of any assets.
The Standard stations will be incorporated into Astral's radio division run by president Jacques Parisien.
"Once we receive regulatory approval, we expect a smooth integration process with no job losses,'' Parisien said.
Gary Slaight denied that the federal government's decision to tax income trusts like regular corporations prompted the Astral deal.
"It has to do with ongoing dialogue with a group of people that I like and respect and at a time in the state of our business where it makes a lot more sense to grow the business, and this is the best way to do it,'' he told reporters.
Not included in the deal are Standard's interests in Sirius Satellite Radio, Iceberg Media.com Inc., Toronto's R&B station Flow 93.5FM, Haliburton Broadcasting and Newcap Inc. in Alberta.
Astral Media also announced Thursday it will pay $34 million to acquire the remaining 50 per cent of TV channel MusiquePlus Inc. from CTVglobemedia and CHUM.
Separately, Astral Media reported its quarterly profit increased nine per cent to $24.6 million or 47 cents per share from a year-earlier $22.5 million or 42 cents a share. Revenue was up eight per cent at $149.9 million, in what Greenberg said was the 42nd consecutive quarter of growth.
On the Toronto Stock Exchange, Astral A shares gained as much as 4.6 per cent before closing with a gain of 2.8 per cent, up $1.17 to $42.75.
