STANDARD BROADCASTING TUNING IN TO BIG TRUST IPO Slaights in talks on a deal that would value conglomerate at about $1-billion Sinclair Stewart, Grant Robertson and Andrew Willis – Globe and Mail Canada's largest privately owned media conglomerate has hired investment banks to advise it on a potential initial public offering that would value the company at about $1-billion.
Standard Broadcasting Corp. Ltd., a radio broadcasting empire controlled by Toronto billionaire Allan Slaight, met with several Bay Street firms a few weeks ago before retaining Scotia Capital Inc. and RBC Dominion Securities Inc. to explore a range of strategic options, including selling a third of the company in a $300-million income trust IPO, sources said.
There has been speculation in the media industry in the past few days that Standard was contemplating converting to a trust, in part to lay the foundation for estate planning.
Chief executive officer Gary Slaight, 55, the eldest son of Allan, confirmed yesterday the company is in talks on a potential IPO, but wouldn't speculate on the value.
"We're seriously looking at all our options right now and an income trust is one of them," he said, adding that he has not established a schedule for a potential move.
"We are looking at it, but we have not made a decision and we have not finalized anything. Until we decide to go ahead and file, there's not a lot I can say about it."
Standard, a closely held company that holds 51 stations across Canada, has long been considered one of the sector's most profitable companies. However, the radio industry is at a crucial juncture, where a shift in the technological landscape is dramatically reshaping the way audiences listen to music and receive news.
Satellite delivery and iPods are emerging as key competitive threats, and many broadcasters are now lobbying Ottawa to ease onerous ownership restrictions as part of a wide-ranging government review of the sector.
"This is the best-run company in radio, and you can make an argument that the Slaights are selling at the best of times," said one investment banker familiar with the company, pointing to an aging audience. "When was the last time you saw a teenager listening to a radio?"
Several sources said an income trust offers a higher valuation to the Slaights than a sale to an industry rival, with the added benefit of allowing the family to retain control.
The senior Mr. Slaight, 74, is one of Canada's wealthiest entrepreneurs and a legend in the radio industry for his aggressive acquisition of networks over the years. Mr. Slaight helped Toronto's CHUM to become a commercial radio success in the 1950s and '60s and went on to purchase Standard in 1985 for $180-million from Conrad Black.
Standard has since been transformed into a sprawling collection of stations that includes venerable talk radio outlet CFRB and Mix 99.9 in Toronto, Hot 103 in Winnipeg, rock stations Z95.3 in Vancouver and The Bear in Ottawa.
In recent years, the company has expanded aggressively outside traditional radio into Internet radio, DVD distribution and post production. It operates the Internet portal Iceberg Radio in Canada and holds a 40-per-cent stake in Sirius Canada, one of two satellite radio providers that began operating in Canada last year.
Sources said the Slaight family will keep the Sirius stake in their private family company, and only include their conventional radio stations in the trust IPO.
Standard has a history of being able to write large cheques to buy stations as it shuffles its deck of assets. It acquired 60 stations from Telemedia in 2001-02 for $400-million, while purchasing a handful of Manitoba radio stations from Craig Music and Entertainment for $20-million at that time. It kept the most profitable stations and sold off the underperforming ones.
Consolidation in the radio industry largely has been on hold for the past few years, but not for lack of ambition. Most companies view themselves as buyers, rather than sellers, while restrictions on ownership have limited companies to a pair of FM stations and AM stations in each market.
As the industry looks for the government to ease ownership rules, Standard could be a target for several publicly traded rivals, including Astral Media Inc. and Corus Entertainment Inc. Obtaining a public listing, however, could help it become more acquisitive by providing the company with equity to finance takeovers.
Sources familiar with the company's finances said Standard's stations posted 8-per-cent growth on about $500-million in sales last year, and its profit runs to 40 per cent of sales. As an income trust, the company is expected to offer investors an 8-per-cent yield on units that will be sold for $10 each.
As rumours of a potential Standard IPO spread yesterday, several of its rivals saw jumps in their stocks. Corus gained $1.61 to close at 37.81 while Astral rose 66 cents to close at 33.98. |