Broadcaster hopes to make an acquisition before it even considers an income trust Grant Robertson – Globe and Mail
Astral Media Inc. is flush with cash and considered a prime candidate for an income trust, but the Montreal-based broadcaster said it's unlikely such a move will be contemplated ahead of a major acquisition.
The comments came yesterday amid renewed talk of consolidation in the Canadian media sector where Astral is thought to be a potential buyer if several companies go on the block.
Converting to an income trust, which pays out most of its cash directly to investors, is not a priority for Astral, chief financial officer Claude Gagnon told analysts as the company announced a 57 per cent increase in fourth-quarter earnings.
"We might consider conversion, but that's not for today," Mr. Gagnon said. "It might be in the wake of a major acquisition, but we believe that by converting to an income trust we would lose a lot of the financial flexibility that we have."
Instead, Astral will ask its board in December for approval to use some of the $69-million cash stockpile it has to buy back shares and increase the company's dividend.
Astral, which has said it is interested in buying other media companies, took similar steps last year after building up a $100-million war chest, but could not find a potential target to spend it on.
The company, which operates specialty and pay television channels, radio stations and outdoor billboard advertising, was the other bidder for CHUM Ltd. this summer, but backed off when Bell Globemedia stepped forward with $1.4-billion.
BGM also owns the CTV network and The Globe and Mail. Its acquisition of CHUM, the country's third-largest commercial network, is expected by analysts to spur further media consolidation.
A decision by CanWest Global Communications Corp. to seek strategic advice on television operations in Australia, which could include a sale worth $1.5-billion, by some calculations, has prompted speculation that the Winnipeg-based company would look to bulk up in Canada.
Astral has been talked about as a possible suitor for several companies should they go up for sale, including Corus Entertainment Inc. and privately held Standard Broadcasting Corp. Ltd., which owns radio stations in most major cities.
Standard has been contemplating an income trust conversion, but put those plans on hold in the spring when the market appetite for new offerings softened. Standard chief executive officer Gary Slaight said the company is still mulling its options, including remaining as a private company. Mr. Slaight has said he is not interested in an outright sale, though analysts believe the company would draw several attractive offers.
Astral, meanwhile, says it is looking at all potential buys.
"We have made it clear that we are buyers in any one of our core businesses. That's TV, radio or outdoor," Astral CEO Ian Greenberg said. "And any property that becomes available, any company that becomes available, becomes our priority in any one of those three core businesses."
Astral made $52.5-million or 97 cents a share in the fourth quarter. Those numbers compared with earnings of $33.3-million or 59 cents a share last year, due mostly to a $23.6-million income tax gain. Revenue rose to $146.1-million from $139.9-million. [ Email this article | Return to ByrnesMedia Main Page ] |