One of Toronto’s radio giants is to be swallowed in a billion-dollar media acquisition that will see one company dominate Canada’s radio airwaves.
After months of negotiation, Astral Media Inc. announced yesterday that it will purchase all of Standard Radio Inc.‘s 52 conventional radio stations – including The Mix, Newstalk and EZ Rock in Toronto – to become the biggest owner of radio stations in the country.
“That’s the end of Standard Radio,” said Gary Slaight, Standard’s president.
The purchase will cost Astral $1.08 billion, 80 per cent to be paid in cash and 20 per cent in Astral’s non-voting shares. Astral will own 81 radio stations.
Standard, a privately owned company whose CFRB radio station has been an institution in Toronto since 1927, will keep its interests in satellite radio, its MapleMusic label and some Internet-based assets.
The acquisition needs approval from the Competition Bureau and the Canadian Radio-television and Telecommunications Commission. Astral expects to clear those hurdles by the beginning of 2008.
“There is absolutely no overlap (between stations),” said Ian Greenberg, Astral’s president. The acquisition is a perfect strategic fit for the company, he said.
“There was some speculation that we would have to sell operations in Quebec,” he said. But the stations that are close geographically are “divided by linguistic lines. ... There’s no conflict anywhere in the company, including Montreal.”
If the deal is approved, Astral Media will have 3,000 radio station employees, Greenberg said, adding that no layoffs or major restructuring at those stations should be expected.
“We realized that to grow, we had to go outside Quebec,” said Greenberg, noting the content of the radio stations’ programs is unlikely to change.
Kevin Restivo, an analyst with SeaBoard Group, said Standard Radio is already a lean company and cuts are unlikely, but with the recent consolidation of so many media companies, “It’s a sad day for advertisers.”
“Fewer players in the market means higher rates,” he said.
Radio stations are already bare-bones, locally based operations. A network that spans the country would give Astral the opportunity to create national advertising campaigns that in turn could command higher rates.
Greenberg disputes that higher advertising rates are inevitable for the company, which will soon command 31 per cent of market share. Major competitor Corus owns 28 per cent.
“I think there’s going to be enough competition that it won’t affect rates,” he said.
The Astral announcement comes in the midst of a slew of media buyouts, including the pending purchase of Alliance Atlantis by CanWest Media, and the sale of CHUM Ltd., which is being bought by CTVglobemedia Inc.
A CRTC hearing on the concentration of media ownership scheduled for the end of April has been postponed until fall, giving Canadians more time to respond.
“This is likely part of a trend to rush to complete any proposed mergers and acquisitions because (the CRTC has stated that) all such deals are going to be subject to previous CRTC rules,” after those hearings, said Liss Jeffrey, director of the McLuhan Global Research Network at the University of Toronto.
Besides the radio stations, Astral is also set to take over IMS, a national advertising sales company, two television stations in northern B.C. and Sound Source Networks, which provides stations with programming like Rick Dee’s Weekly Top 40 and David Letterman’s Top 10 List.
It will not acquire Standard’s share in Sirius Satellite Radio Canada, Flow 93.5 FM, the Maple Music label or Puretracks, an online music store.
Greenberg said Astral had no interest in buying Standard’s Internet-based streaming radio interests, such as its share of Iceberg Media Inc.
Slaight said Standard started considering selling the company when plans to become an income trust fizzled last summer.
“When we started to look at income trusts, we started thinking about strategy in terms of long-term planning,” he said. “That got things going.”
Neither company divulged details of the negotiations.
“They were demanding,” said Slaight, who elicited laughs throughout the press conference with his one-liners.
“They were very tough but always compassionate.”
Astral Media’s stock rose $1.17 to $42.75 in Toronto yesterday.
