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Canadian broadcaster Astral Media to buy Standard Broadcasting Corp

BY A CORRESPONDENT
February 25, 2007

Astral Media Incorporated, a broadcaster based in Montreal, Canada, is buying Standard Broadcasting Corporation Limited.

The acquisition will make Astral Media Canada’s biggest radio broadcaster, with 81 radio stations across the country.

A spokesman for Astral Media said a firm agreement to buy Standard Broadcasting Corporation would be signed by the end of March 2007.

Ian Greenberg, CEO of Astral, said in a statement that he is delighted to acquire “the best performing radio stations in Canada.”

The potential purchase price was not disclosed, but a reliable source told the Financial Post, which broke the story, that Standard Broadcasting Corporation is expected to fetch $1.15 billion.

Astral Media said it expects to pay 80% of the purchase price in cash, and the remaining 20% with its class A non-voting shares.

The deal allows Astral Media to expand its network of radio stations outside of Quebec and the Maritimes, which it has long wanted to do. The company had tried to buy CHUM Limited last summer, but was beaten out by CTVGlobemedia Inc.

Industry insiders have hailed Astral Media’s buying a top-notch company with complementary assets. Standard Broadcasting Corporation is privately owned, but it had released a prospectus in 2006 when it planned to convert into an income trust.

Astral Media is paying a hefty price for Standard Broadcasting Corporation’s assets. Carl Bayard, an analyst at Desjardins Securities, said it is a “departure” for Astral Media to pay this much. “Astral has always been a disciplined buyer,” he remarked.

At $1.1 billion, Bayard said, the price tag implies a multiple of 13 to 13.5 times Standard’s earnings (before interest, taxes, depreciation and amortisation), assuming earnings are up by 5% since Standard filed the prospectus in 2006.

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 Bayard.

Gary Slaight, Standard’s chief executive and a member of the company’s controlling family, said he would not stay on with Astral Media, as he is choosing to leave for “personal reasons.” But he said he plans to help Astral Media in the transition period and may also join the company’s board of directors.
 

 


 

 

 

 

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