One evening last summer, Goldman Sachs managing director Gerry Cardinale flew in to Montreal from New York and made his way to Ristorante Bice, one of the city's most glamorous meeting spots.
Cardinale had never met his dinner companion before. The burly Philadelphia-born Wall Streeter was conversant about the Canadian media industry, since he had helped finance CanWest Global Communications' purchase of specialty channels owned by Alliance Atlantis two years earlier. But Cardinale didn't know much at all about Ian Greenberg, the CEO of Astral Media Inc.
As the two men chatted casually over their Italian dinner, Cardinale got Greenberg's message. It was simple enough. CanWest, they both knew, was now struggling to stay afloat in a sea of debt. And, Greenberg said, should Goldman Sachs want to sell off its stake in the partnership with CanWest that owns profitable cable channels such as HGTV, Showcase and Food Network, Astral was interested.
Far short of putting an offer on the table, Greenberg just wanted Goldman Sachs to know one thing: If you're going to do business in the Canadian media sector in the next few years, you should get to know Astral. And you should get to know me.
Then Greenberg brought up a favourite topic: food. When things are going well at Astral, he suggested to Cardinale, he eats more. "That's why I've put on all this weight." Astral was shortly to announce its 52nd consecutive profitable quarter.
Greenberg is looking to expand at a time when many of Canada's better-known media companies are contracting. The build-out began with his $1.1-billion purchase of Standard Broadcasting in 2007. The deal took the company to No. 1 in private-sector radio nationally, giving Astral some of the most popular stations in their respective markets, such as Calgary's CJAY 92 and Winnipeg's Hot 103.
Meanwhile, in its guise as one of Canada's biggest billboard companies, Astral quietly won the city of Toronto's "street-furniture" contract for bus shelters and billboards. Over the next 20 years, the deal is worth $1.5 billion in projected revenue.
And alongside those two moves, Astral, which is also a player in specialty and pay-TV, has aligned itself with some powerful global media brands. It has put the Virgin name on several of its radio stations and been given access to the iconic Disney brand for specialty TV properties such as Playhouse Disney. Greenberg also struck a deal to bring HBO into the country as a dedicated channel for the first time.
Not that Astral has been wholly immune to the effects of the recession. As other broadcasters began re-evaluating the worth of their assets last year, so too did Astral, booking a $317-million writedown on the value of radio properties acquired in a more heated market. Investors who were otherwise fleeing the media sector seemed not to care, however. The company's shares went up the day news of the writedown was released in October.
Here's why: Despite purchasing Standard, which brought Astral's national roster of radio stations to 81, the company has kept its debt far lower than its peers. To take a drastic example, when CanWest filed for protection from creditors last fall, its ratio of debt to EBITDA (earnings before interest, taxes, depreciation and amortization) was approaching 6:1. Astral's ratio has hovered around 2:1, and Greenberg figures it will drop lower in 2010. The company isn't tied down by leverage the way its rivals are.
In fact, when the credit crisis hit in the fall of 2008, seizing up bank lending, Greenberg dipped into Astral's cash reserves to pay off debt. He was sending a message to his lenders: Here's some cash now when you need it, but remember this when we come knocking.
Age 67 may seem late to be coming out as a media mogul. And Greenberg is entering a field full of outsized personalities-Rogers, Asper, Péladeau, to name a few-that have been difficult not to know. But as Type A media empires stumble during the recession, Greenberg's low-key record of profit and prudence suggests he truly is the guy to know.
The Astral war room is Greenberg's cozy, dimly lit office at the company's Montreal headquarters. With drawn shades and plush couches, it looks more like a lounge than an executive suite. Here, Astral's moves are plotted weekly by Greenberg and Sidney Horn, a lawyer at Stikeman Elliott who acts as Greenberg's consigliere. In the late afternoon, as they relax with cigars, Greenberg pulls out a notepad of ideas he has scribbled down over the course of the week and bounces them off Horn. "My involvement is to ask him questions, to test him," Horn says. "Does this deal really make sense? Why do you want it? Are you sure this is good for the company? Convince me."
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