ASTRAL MEDIA TO BUY STANDARD RADIO Peter Koven and Barbara Shecter – Financial Post Astral Media Inc. confirmed that it has signed a letter of intent to buy Standard Broadcasting Corp. Ltd., a deal that will make Astral Canada’s biggest radio broadcaster with 81 stations across the country.
A spokesman at Montreal-based Astral said a firm agreement to buy Standard should be signed by the end of March, while sources expect it within the next two weeks. In a statement, Astral CEO Ian Greenberg said he’s delighted to acquire "the best performing radio stations in the country."
The potential purchase price was not disclosed. But a person familiar with the deal told the Financial Post, which broke the story earlier today, that Standard is expected to fetch $1.15-billion. Astral said it expects to pay 80% of the purchase price with cash, and the remaining 20% with its class A non-voting shares.
The deal allows Astral to expand its network of radio stations outside of Quebec and the Maritimes, which it has long wanted to do. The company tried to buy CHUM Ltd. last summer but was beaten out by CTVGlobemedia Inc.
Industry insiders cheered the Astral-Standard union yesterday, saying Astral is buying a top-notch company with complementary assets. Standard is privately-owned, but it released a prospectus last year when it planned to convert into an income trust.
"Standard is a very lean and mean organization," said Mark Lewis, a media lawyer with Lewis Birnberg Hanet. "It’s generating very significant profits at the present time. We don’t really know what those profits are, but you have a pretty good idea of what they must be doing because they run very successful operations in different cities. I’ve been told that their operating costs are much more efficient than CHUM or Rogers."
Astral is paying a hefty price for the assets. Carl Bayard, an analyst at Desjardins Securities, said it’s a "departure" for the company to pay this much. "Astral has always been a disciplined buyer," he said.
At $1.1-billion, Mr. Bayard said the price tag implies a multiple of 13 to 13.5 times Standard’s earnings (before interest, taxes, depreciation and amortization), assuming earnings are up 5% since Standard filed the prospectus last year.
While that multiple is similar to what was paid in recent deals for CHUM and Alliance Atlantis Communications Inc., those companies own specialty TV properties in which revenue is growing at a faster clip than radio.
"Radio is doing well, but I don’t think anyone expects radio will grow by 10% this year," said Mr. Bayard.
Gary Slaight, Standard’s chief executive and a member of the company’s controlling family, said he will not stay on with Astral, as he is choosing to leave for "personal reasons." But he plans to help Astral in the transition period "as much as I can." He said he may also join the company’s board of directors. |