Alliance Atlantis courts buyers, stock price soars Broadcasters already may be kicking tires by Rick Westhead
Source : Toronto Star
December 21, 2006
Distributor of CSI series seen as attractive asset Alliance Atlantis Communications Inc., the Toronto media company that owns distribution rights to the hit TV series CSI: Crime Scene Investigation, has put itself up for sale.
The news, announced early yesterday, sent the company's shares skyrocketing and left many Bay Street analysts and media officials speculating about who might surface to mount a serious takeover offer.
Besides acting as the worldwide distributor of the CSI series, Alliance Atlantis owns 13 specialty TV channels, including Showcase, The Food Network and HGTV.
That segment of the broadcast industry has grown in popularity in recent years - at the expense of over-the-air conventional broadcasters like Global TV and the CBC.
The development has prompted some media industry officials to suggest that rival media company CanWest Global Communications Corp. would be a "perfect fit" with Alliance Atlantis.
CanWest owns newspaper and TV investments such as Global TV, but it "isn't developed at all in the specialty TV market and that's where the upside is," said Hugh Dow, president of M2 Universal, a Toronto advertising agency.
Since 2003, more TV viewers have tuned in to watch non-conventional TV (cable and pay TV channels) than traditional channels like Global or the CBC.
Can CanWest afford Alliance Atlantis? "That's the big question," Dow said. CanWest said it had $2.8 billion (U.S.) worth of debt as of Aug. 31.
While so much debt may prove unwieldy if CanWest were to try to put together a bid for Alliance Atlantis, Dow said CanWest is trying to sell TV interests in New Zealand and Australia and could use the proceeds to help pay for an acquisition.
CanWest spokesman Bruce Leslie declined to comment on a possible bid. An Alliance Atlantis spokeswoman declined to comment.
Alliance Atlantis's controlling owner is Southhill Strategy Inc., whose investors include Alliance Atlantis executive chairman Michael MacMillan and film and TV producer Seaton McLean. Southhill said yesterday that while it has sought expressions of interest, it may decide against selling its stake, which would make a sale of Alliance unlikely.
One complicating factor for any potential takeover: Alliance Atlantis is only a part owner of the hit show CSI: Crime Scene Investigation.
Several analysts predicted yesterday that Alliance Atlantis could fetch at least $50 a share, 18 per cent more than the stock's closing price on Monday. Alliance Atlantis shares climbed $6.50, or 15.3 per cent, to $49 yesterday.
CanWest probably won't be the only company interested in bidding for Alliance Atlantis, which is also trying to sell its stake in Motion Picture Distribution LP.
"Given the attractiveness of its specialty broadcasting assets, there are a number of players for whom an (Alliance Atlantis) purchase would make strategic and financial sense," Desjardins Securities analyst Carl Bayard wrote in a research note to clients.
"Astral, Corus (which is controlled by Shaw) and CanWest ... would all kick the tires."
Some potential acquisitors may already have started kicking, said Credit Suisse analyst Randal Rudniski.
"The announcement may indicate that Alliance has been approached by one or more media companies," Rudniski wrote in a report yesterday.
Montreal's Astral Media Inc., a pay-TV and French-language specialty TV broadcaster, said recently that it plans to expand beyond its base in Quebec.
M2's Dow said it's possible that Alliance Atlantis officials were spurred to put the company up for sale in the wake of Bell Globemedia Inc.'s recent $1.66 billion purchase of Alliance rival CHUM Ltd.
© Toronto Star
The news, announced early yesterday, sent the company's shares skyrocketing and left many Bay Street analysts and media officials speculating about who might surface to mount a serious takeover offer.
Besides acting as the worldwide distributor of the CSI series, Alliance Atlantis owns 13 specialty TV channels, including Showcase, The Food Network and HGTV.
That segment of the broadcast industry has grown in popularity in recent years - at the expense of over-the-air conventional broadcasters like Global TV and the CBC.
The development has prompted some media industry officials to suggest that rival media company CanWest Global Communications Corp. would be a "perfect fit" with Alliance Atlantis.
CanWest owns newspaper and TV investments such as Global TV, but it "isn't developed at all in the specialty TV market and that's where the upside is," said Hugh Dow, president of M2 Universal, a Toronto advertising agency.
Since 2003, more TV viewers have tuned in to watch non-conventional TV (cable and pay TV channels) than traditional channels like Global or the CBC.
Can CanWest afford Alliance Atlantis? "That's the big question," Dow said. CanWest said it had $2.8 billion (U.S.) worth of debt as of Aug. 31.
While so much debt may prove unwieldy if CanWest were to try to put together a bid for Alliance Atlantis, Dow said CanWest is trying to sell TV interests in New Zealand and Australia and could use the proceeds to help pay for an acquisition.
CanWest spokesman Bruce Leslie declined to comment on a possible bid. An Alliance Atlantis spokeswoman declined to comment.
Alliance Atlantis's controlling owner is Southhill Strategy Inc., whose investors include Alliance Atlantis executive chairman Michael MacMillan and film and TV producer Seaton McLean. Southhill said yesterday that while it has sought expressions of interest, it may decide against selling its stake, which would make a sale of Alliance unlikely.
One complicating factor for any potential takeover: Alliance Atlantis is only a part owner of the hit show CSI: Crime Scene Investigation.
Several analysts predicted yesterday that Alliance Atlantis could fetch at least $50 a share, 18 per cent more than the stock's closing price on Monday. Alliance Atlantis shares climbed $6.50, or 15.3 per cent, to $49 yesterday.
CanWest probably won't be the only company interested in bidding for Alliance Atlantis, which is also trying to sell its stake in Motion Picture Distribution LP.
"Given the attractiveness of its specialty broadcasting assets, there are a number of players for whom an (Alliance Atlantis) purchase would make strategic and financial sense," Desjardins Securities analyst Carl Bayard wrote in a research note to clients.
"Astral, Corus (which is controlled by Shaw) and CanWest ... would all kick the tires."
Some potential acquisitors may already have started kicking, said Credit Suisse analyst Randal Rudniski.
"The announcement may indicate that Alliance has been approached by one or more media companies," Rudniski wrote in a report yesterday.
Montreal's Astral Media Inc., a pay-TV and French-language specialty TV broadcaster, said recently that it plans to expand beyond its base in Quebec.
M2's Dow said it's possible that Alliance Atlantis officials were spurred to put the company up for sale in the wake of Bell Globemedia Inc.'s recent $1.66 billion purchase of Alliance rival CHUM Ltd.
© Toronto Star
