REVscene Automotive Forum - Bell purchases CTV for $3.2B

http://www.financialpost.com/news/sn...365/story.html

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BCE Inc. said Friday it has agreed to acquire broadcast giant CTV for $1.3-billion, in a deal valued at $3.2-billion.

Bell, which currently holds a 15% stake in CTV, will acquire the remaining 85% for $1.3-billion in equity value from an ownership group including The Woodbridge Company Ltd., the Toronto-based holding company of the Thomson family, the Ontario Teachers Pension Plan and Torstar Corp.

Bell expects to close the deal by mid-2011, however there are several regulatory hurdles in the way including approvals from the Canadian Radio-television and Telecommunications Commission and the Competition Bureau.

Including Bell's current stake, the equity value comes in at $1.5-billion. Add in proportionate debt of $1.7-billion, and the total transaction value is $3.2-billion, the company said in a release.

In a separate transaction, Woodbridge has agreed to acquire the Globe and Mail.

Bell maintains a 15% equity position in the newspaper.

"Our industry is changing rapidly. Increasing vertical integration across the communications landscape, ongoing technological advancement and key regulatory developments introduce new opportunities with the ownership of high-demand content by Bell," George Cope, chief executive of Bell Canada and BCE, said in a release. "Our acquisition of CTV more than levels the playing field in our increasingly competitive industry."

Ivan Fecan, chief executive with CTV, also trumpeted the importance of vertical integration across conventional, specialty and digital TV and radio assets.

"In today's digital age, it is extremely important to be part of a vertically integrated company that can take advantage of video delivered on multiple screens," he said in the release. "CTV has emerged stronger than ever from the recession ... This is the right deal at the right time."

CTV operates Canada's no. 1 TV network with 27 stations across the country. The broadcaster also owns 30 specialty channels, including leading sports network TSN as well as web properties CTV.ca, MuchMusic.com and others. CTV also owns CHUM Radio, which operates 34 radio stations across Canada.

Siim Vanaselja, chief financial officer for Bell Canada and BCE, said the deal will be "immediately accretive" to earnings and free cash flow.

The deal will be funded by a new bank facility worth $2-billion as well as $750-million in new BCE common sahres issued to Woodbridge and surplus cash.

"Based on our discussions with the rating agencies, we expect our credit ratings to be confirmed," he said in the release.

Moody's Investors Service said Friday its ratings for Bell Canada and BCE are unaffected by the announcement.

"Woodbridge is very pleased to make this sizeable equity investment in BCE," David Thomson, chairman of Woodbridge, said in the release. "We are confident in Bell's ability to execute on the incredible growth opportunities in Canadian communications, including the increasing consumer demand for video across multiple platforms."