ASTRAL STALKS STANDARD Price estimated at $1.1B: Sources point to 'strategic logic' of broadcast union Barbara Shecter – Financial Post Astral Media Inc., the TV and radio operator that missed out on two recent billion-dollar media takeovers, is in talks to buy radio powerhouse Standard Broadcasting Corp., sources say.
Privately held Standard, which owns one of Canada's largest radio networks with 51 stations including CFRB in Toronto and EZ Rock adult contemporary stations across the country, is worth about $1.1-billion, according to investment-banking and media industry sources.
There is a "strategic logic" to bringing Astral, which is based in Montreal, together with Standard, said a person familiar with the talks. But issues remain, including due diligence and a final decision by the family of Allan Slaight and his son, Gary Slaight, to part with the company they built.
"It's advanced, but these things are always fragile to the very end," said the source.
Another source suggested a deal could be announced within the next week or two.
Standard's radio network spans the country, while Astral has 29 radio stations in Quebec and the Maritimes, with pay and specialty TV channels including The Movie Network (TMN). There is little overlap between the two companies.
Of the potential combinations in the media sector, "it's the obvious one," said a source familiar with the plan.
At the end of its fiscal year in August, Astral was sitting on $124-million in cash and executives have been telling investors for years that they are seeking acquisitions. The company, controlled by Montreal's Greenberg family, was the losing bidder last summer in the $1.7-billion sale of radio and TV broadcaster CHUM Ltd. to Bell GlobeMedia (since renamed CTV GlobeMedia).
Sources say Astral was also in talks with specialty TV operator Alliance Atlantis Communications Inc. before Alliance was purchased by CanWest Global Communications Corp. and a private equity arm of Goldman Sachs & Co. in January for $2.3-billion.
Both of those deals, which are awaiting regulatory approval, stoked speculation that the Slaight family would sell Standard.
Plans to float part of Standard's radio business into an income trust were shelved last summer, leading to speculation the whole business would be sold privately.
At the time, Gary Slaight, who is Standard's chief executive, rejected the notion. Mr. Slaight, reached in Collingwood, Ont., yesterday, declined to comment.
Sources say Allan Slaight -- who bought a much smaller and ailing Standard Broadcasting from Conrad Black in 1985 for $180-million and turned it around -- is 75 and has been giving careful consideration to his "legacy" and estate planning.
As for Astral, "We don't comment on rumours," said Alain Bergeron, vice-president of corporate communications.
A source familiar with the current talks between Standard and Astral said asset sales have to address "more than just economic concerns when they involve entrepreneurs."
Some observers have suggested Gary Slaight might want an ongoing role at any company that were to purchase Standard.
Standard's radio business, if sold, is expected to receive a rich valuation, analysts say.
The CHUM deal, which included a radio network, fetched a 50% premium to the share price. And Standard has the best margins in the business at close to 40%, according to a prospectus filed in connection with last summer's shelved trust offering.
In addition, radio operators have posted healthy revenue gains since the trust IPO was pulled last summer, and the federal broadcast regulator did not impose heavier Canadian-content requirements last year, as industry players had feared.
In addition to the traditional radio business, Standard's holdings include a 40% stake in satellite- radio broadcaster Sirius Canada, a radio-programming service and an Internet-radio venture.
ON THE SAME WAVELENGTH?
ASTRAL MEDIA INC.
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