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Report On Business CRTC approves Corus’s $2.65-billion acquisition of Shaw Media

Corus Entertainment's headquarters is shown in Toronto on Wednesday, January 13, 2016.

Cole Buston/THE CANADIAN PRESS

The federal broadcast regulator has cleared the way for Corus Entertainment Inc.'s $2.65-billion acquisition of Shaw Media, removing the final obstacle to a deal that endured a public dissection at the hands of shareholders.

The Canadian Radio-television and Telecommunications Commission (CRTC) released a decision approving the deal late Wednesday afternoon, noting that the combined company should be "a stronger player" in an uncertain television market. Corus expects to close the transaction on April 1.

Key to the CRTC's approval was the fact that Corus and Shaw Communications Inc., the parent company of Shaw Media, are both controlled by Alberta's Shaw family through a trust. As a result, regulators have treated the two companies "as a single voice in the Canadian marketplace since the 1990s," CRTC chairman Jean-Pierre Blais said in a statement. "This decision changes nothing in that respect."

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Corus has cast the deal as transformative, giving it the scale and leverage it needs to compete in a rapidly changing TV landscape, and to navigate a series of major regulatory changes the CRTC is rolling out that promise to upend key aspects of the broadcasting ecosystem. But the terms of the deal were also subjected to extra scrutiny through a very public fight waged by Catalyst Capital Group Inc., a private equity firm and activist investor that sought to delay the transaction and force Corus to negotiate a lower purchase price.

Ultimately, minority shareholders voted to approve the deal – though 21.5 per cent of them cast votes against it – as the benefits of combining the two companies were seen to outweigh concerns about the higher debt leverage Corus is taking on to pay for Shaw Media. The combined Corus-Shaw entity will control 34.5 per cent of English TV viewership in Canada through a stable of 45 specialty and 15 conventional television stations, and will also own 39 radio stations, the Nelvana content studio and other assets.

Doug Murphy, Corus's president and chief executive officer, said in a statement that the company is "very pleased" with the CRTC's decision, and will begin the "important integration work" to bring the two companies together.

Through a public call for comments, the CRTC said it received 40 interventions about the deal, including eight that opposed it, and 25 requests for an in-person public hearing on the deal. The president of the Canadian Media Producers Association, Reynolds Mastin, had said publicly that he is "very concerned" that the deal is exacerbating what he calls a hyper-consolidation of the broadcasting sector. But the CRTC decided an in-person hearing was "not required."

Rather, the regulator's decision appears to have been swayed by Corus's pitch for the merits of the merger.

"This decision will help position Corus Entertainment Inc. as a stronger player in the market and help elevate more Canadian-made programming to new heights both here in Canada and around the world," Mr. Blais said. "This helps support the entire audiovisual ecosystem in Canada."

Because there is no effective change in control of the companies involved in the deal, the CRTC will not collect any tangible benefits payments.

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Shaw Communications plans to use the proceeds of the sale of its media arm to fund its $1.6-billion acquisition of wireless carrier Wind Mobile Corp., which closed on March 1, as it moves to focus more exclusively on broadband and wireless connectivity.

Over the last year, Corus's share price has fallen from more than $20 to less than $9 several weeks after the deal with Shaw was announced, but it has since recovered somewhat to $11.53 at Wednesday's close on the Toronto Stock Exchange.

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