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Shaw Communications Inc. is attempting to sell its stake in broadcaster Corus Entertainment Inc. as part of a strategy to build a war chest for expansion of its Freedom Mobile wireless network.

Shaw recently hired investment bank TD Securities Inc. to find a buyer for its 38-per-cent stake in television and radio station owner Corus, according to sources familiar with the Shaw’s plans. These sources say Shaw is shopping its Corus stake, currently worth approximately $540-million, to a list of dozens of potential buyers, with a focus on private equity funds and other deep-pocketed investors that don’t currently own a national media business in Canada.

Toronto-based Corus owns a stable of 44 specialty television channels, including the Food Network and HGTV, and 15 conventional TV stations, including the national Global TV network, along with 39 radio stations. Sources say Shaw and Corus would listen to offers for individual business lines and that Shaw would also be content to continue as a major shareholder in Corus if no buyers emerge.

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Spokespeople for Shaw, Corus and TD declined to comment.

Shaw is attempting to sell Corus at a time when the broadcaster’s revenue is falling, partly because of shrinking audiences and advertising for conventional TV. Corus is expected to cut its $1.14 annual common share dividend when the company reports financial results later this month. The dividend currently sends $90-million annually to Shaw Communications.

Both Shaw and Corus are ultimately controlled by the Shaw family of Alberta. Sources say the Shaw family and Shaw Communications are attempting to sell both the voting and non-voting Corus stock, putting the entire company in play.

Shaw acquired the majority of its stake in Corus in April, 2016, when it sold media assets to the company, including the Global networks, and a lock-up agreement on the shares expired in April of this year. In a recent report, Barclays Capital Inc. analyst Phillip Huang said: “On the potential sale of the Corus stake, [Shaw] management said it was never their intention to hold it in perpetuity, but they have no urgent cash needs.”

The bulk of Canada’s TV and radio stations are controlled by four major companies – Shaw and telecom rivals BCE Inc., Rogers Communications Inc. and Quebecor Inc. While these companies are all expected to look at Corus, regulatory and competition concerns are seen standing in the way of a offer for the entire business.

Last month, the federal Commissioner of Competition blocked the proposed sale of two Corus-owned specialty television channels – French-language offerings Historia and Séries+ – to BCE subsidiary Bell Media Inc. These regulatory issues would become even more daunting if a rival were to attempt acquiring all of Corus’s businesses.

Shaw Communications’ roots are in cable and the company made a major strategic shift in 2015 by jumping into wireless, acquiring what’s now branded as Freedom Mobile for $1.6-billion. Freedom currently has 1.3 million subscribers and Shaw could more than double its wireless reach to three million customers over the next decade with an aggressive expansion strategy, according to analysts.

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The cost of that campaign will be significant. Shaw spent $173-million upgrading its wireless network though the first six months of the year, a 47-per-cent increase in capital spending over the previous year, and faces an ever-increasing need for cash as the industry prepares to roll out ultra-fast 5G wireless networks.

“Wireless and telecom is a game of giants, so the last thing you want is a balance sheet that gives any doubt about your ability to finance what needs to be built,” said an executive familiar with Shaw. He said the company is in an arms race with regional rival Telus Corp., upgrading to compete and spending billions to run fibre to the homes of customers, in addition to spending on wireless.

Cable industry pioneer JR Shaw founded Corus in 1999 and his family maintains control through a trust that owns 85 per cent of the media company’s voting shares. In addition, Shaw Communications owns 80.6 million non-voting Corus shares.

Corus stock has performed poorly over the past three years, declining steadily from $20 levels to close Tuesday at $6.80, as viewers watched less conventional TV and were able to select smaller pay TV packages with fewer specialty channels. Corus has a $1.4-billion market capitalization and $2.1-billion of long-term debt.

However, private equity funds may be attracted to the fact that Corus generated $293-million in free cash flow last year. Private equity buyers would face minimal regulatory issues if they attempted to acquire Corus.

If Shaw and Corus are willing to break up the media company to entice buyers, sources say regional companies such as the the Jim Pattison Broadcast Group LP would likely be bidders on assets such as its network of radio stations.

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Maureen Chant, a spokeswoman for the Jim Pattison Group in Vancouver, declined to say whether there had been any discussion regarding Corus assets. “If they call us, we’ll talk to them,” Ms. Chant said.

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