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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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