FAMILY TENSIONS MOTIVATED SALE OF CHUM Gordon Pitts and Jacquie Mcnish - Globe and Mail With files from Grant Robertson
A potentially serious rift among the three children of CHUM Ltd.'s late founder Allan Waters was the catalyst driving negotiations that led to yesterday's announcement that Bell Globemedia will buy CHUM's highly coveted broadcasting empire, industry sources say.
The initial push for selling the company, the sources say, came from Sheryl Bourne, the increasingly alienated younger sister of Mr. Waters's two sons, Jim and Ron. Though a multi-millionaire, she maintains a low profile in a Toronto suburb.
The senior Mr. Waters had spoken to many potential buyers but always resisted selling the company he had built over 50 years from a pioneering rock 'n' roll radio station. But his death last December at age 84 forced the heirs into a wrenching decision to sell the company, a predicament all too familiar among family companies.
Bell Globemedia, which also owns CTV and the Globe and Mail, said yesterday it would pay $1.4-billion to acquire CHUM, an industry innovator considered the third force in private Canadian television, behind CTV and Global Television, as well as a major owner of radio stations.
One broadcast executive said the death of a business founder inevitably causes tensions to surface among successors. "When Mr. Waters was not at the dinner table to say 'no freaking way,' do you really think the three children are asking 'What would dad have wanted to do?' " the executive said.
Although the family rift was eventually patched up, Ms. Bourne's unhappiness was a key factor driving the process at the start. She emerged as a central player even though, unlike her two older brothers, who are former CHUM executives, she never held an operational role in the company.
But the future of a family business, even one as vast as CHUM, is always subject to shifting family relationships. The potential for conflict, and ultimately the sale of the business, is particularly acute when some family members are deeply involved in the business and others are disengaged investors.
Following Allan Waters' death, the company line was that CHUM was not for sale. But in the background, according to one person close to CHUM, Ms. Bourne had made it clear that she wanted to sell her one-third stake and take the cash.
Her stand left her brothers with little choice but to consider selling as well because they would have had to assume enormous debts to pay for their sister's share of the family's total interest, which yesterday's deal values at $446.9-million.
Her increasing alienation was underlined when Jim, CHUM's chairman, and Ron, its vice-chairman, last December replaced Ms. Bourne on the board with a former CHUM music executive, Denise Donlon. It is unclear whether Ms. Bourne left the board of her own accord, but "it was clear she wasn't happy," another industry executive said.
In this case, it was an atypical family business, one that often seemed to operate more like a mom-and-pop corner store than a major national broadcaster with a hip and sassy collection of TV and radio properties that include MuchMusic, CITY-TV and SexTV.
For years, anyone who tried to telephone Allan Waters at CHUM had to contend with a stone wall erected by his wife, Marjorie, who served as receptionist and gatekeeper.
The family matriarch, Marjorie Waters, in the decision to sell would have been critical, sources say. Ms. Waters, still a CHUM director, puts family unity as a high priority, probably above even the business itself. Seeing her children quarrel about the disposition of assets would have been too much to bear, one industry executive says, and that might have won her backing for a sale.
Another factor might have been CHUM's increasing competitive uncertainty. CHUM had expanded heavily in conventional television by buying the assets of Craig Media in 2004, but the deal failed to pay off as expected. CHUM was losing out in efforts to snare hit U.S. programs from giants Global and CTV. What's more, its MuchMusic rock TV franchise is under attack from MTV Canada, a U.S. import now owned by arch-rival CTV.
Although Ms. Bourne's desire to sell was the initial catalyst behind the move, the three children did mend the dispute and agreed in May to sell the firm.
"They worked very closely together. They all feel this is a traumatic and emotional moment for them," said one person close to the deal. "They don't view CHUM as a business -- it has been part of their family since they were children."
But they also knew there would be avid buyers, including a Bell Globemedia that is in the throes of an ownership shuffle that will see the wealthy Thomson family re-emerge as the leading shareholder. "Every significant broadcast company was running acquisition models on CHUM after Allan died," said one person involved in the negotiations.
There was some irony in the emergence of Bell Globemedia president Ivan Fecan as the winning bidder in the CHUM auction. Mr. Fecan is no stranger to CHUM and the Waters family, both as an industry rival and as a former employee.
Thirty years ago, Mr. Fecan was a protégé of TV wunderkind Moses Znaimer, who sold his revolutionary CITY-TV to Mr. Waters's CHUM. But Mr. Fecan has said he learned to admire Mr. Waters too for putting the company on sound fiscal footing.
Now Mr. Znaimer -- who retired from CHUM three years ago -- and the late Mr. Waters are both gone, and Mr. Fecan is poised to be the new boss, assuming that regulatory hurdles are cleared. It would have appalled Mr. Waters, who prided himself on running a tight ship, if he knew that it was CHUM's weakening financial picture that helped deliver the company to Mr. Fecan. |