Astral is acquiring Standard Radio's 52 radio stations, which operate in five Canadian provinces. Ottawa-based rock station 106.9 FM The Bear and country station Star 96, which serves Renfrew County and the Pontiac, are included in the mix.
The company is also buying advertising sales company Integrated Media Sales, radio content service provider Sound Source Networks, and two conventional television stations located in northern British Columbia.
"The strategic fit is perfect. It is financed in such a way that we maintain Astral's prudent capital structure," said Astral CEO Ian Greenberg in a conference call. "It is immediately accretive to earnings before any synergies are taken into account."
Astral currently derives 92 per cent of its radio revenues from the province of Quebec, which has the slowest growth rate of any major region in the country, Mr. Greenberg noted.
The deal, which values Standard Radio at 12.7 times the company's estimated 2007 earnings before interest, tax, depreciation and amortization (EBITDA) of $85 million, will allow Astral to strengthen its revenues in its radio segment and broaden its geographic base.
Astral Media will be paying $880 million cash, while the balance will be paid in the form of 4.75 million class A non-voting shares of Astral, valued at about $200 million at the current share price.
The Communications, Energy and Paperworkers Union of Canada spoke out against the takeover deal, calling the transaction "another threshold in a dangerous concentration of Canada's media.
"Both government and the CRTC have become muted by corporate media power," said the union's vice-president of media Peter Murdoch in a statement. "Radio broadcasters earn profits unheard of in other sectors of the economy, yet employees earn pitiful wages, original news and information programming is on the decrease, and we are headed toward an American-styled radio system, which is controlled by one or two broadcasting empires."
The union urged the CRTC to hold public hearings on the impact of such deals before they happen, calling current regulation "a charade."
"The federal government needs to grant specified funding to the CRTC to conduct a thorough, extensive and public inquiry into the concentration of media ownership in Canada," Mr. Murdoch said.
The transaction is expected to be completed in early 2008, Astral Media said.
Meanwhile, Astral Media announced in a separate statement Thursday that it has agreed to buy the remaining stake in MusiquePlus Inc. that it does not already own for $34 million.
Astral owns 21 radio stations in the province of Quebec and is Canada's largest provider of English- and French-language specialty and pay-TV stations.
.jpg)
