One company is ready to exit from the Canadian province of Quebec, and another thinks that the 11 stations it is therefore able to pick up represent an opportunity, and with regulatory approval, will grow to 16 stations spread out among several markets. The seller, Corus Entertainment Inc., will reap $80M from the sale.
The buyer is Cogeco Inc., which along with its five Quebec stations is said to be the fourth-largest cable operator in Canada.
Corus said that it was shooting for a minimum 30% operating margin for its radio group, according to The Canadian Press, and would have achieved it had it not been for the Quebec stations – it ended 2009 at 23%.
“Corus has operated radio stations in the province of Quebec for the last 10 years and despite investing millions of dollars in talent and facilities, and broadcasting in different formats, we have been unsuccessful in generating adequate financial returns for our shareholders,” said Corus CEO John Cassaday said. He added that Cogeco’s Quebec roots and existing station group made them a more viable competitor to Quebec’s radio leader, Astral Media.
Cogeco’s Louis Audet said in a statement, “The medium of radio continues to enjoy strong support both from listeners and advertisers because of the appeal of its local content. We believe these stations demonstrate good growth potential based on our experience and rigorous evaluation criteria.” The company says it has $100M in bank financing lined up, and will invest some of that into this acquisition.
Among the 16 Cogeco stations will be four in the province’s major municipality of Montreal.
RBR-TVBR observation: This blows the US radio deals we’ve seen lately right out of the water. But maybe it’s a harbinger of US M&A action to come.