Bell Globemedia, which owns CTV and The Globe and Mail, has announced a friendly $1.7 billion purchase offer for CHUM Ltd., marking a major shift in the Canadian media landscape.

Both companies made the announcement Wednesday afternoon, after the Toronto Stock Exchange halted trading of CHUM shares in the morning.

"We think it's a once-in-a-lifetime opportunity that a company like CHUM is available," Ivan Fecan, president and CEO of Bell Globemedia, told CTV Newsnet on Wednesday.

"We wanted to ensure that the legacy of CHUM was secure with an owner that would share our passion for content and represent the best possible fit with our many radio and television stations," said Jim Waters, chairman of CHUM.

Word of the deal came on the same day CHUM laid off 281 workers -- 191 full-time and 90 part-time -- at TV stations in Victoria, Vancouver, Edmonton, Calgary, Winnipeg and Barrie, Ont.  The company changed the format of the traditional one-hour suppertime newscast to a half-hour magazine format for Citytv stations in Calgary, Edmonton and Winnipeg.

In a news release, details indicate BGM is paying a premium for the historic broadcasting company: "The cash consideration represents a 50.0 per cent premium over the 10-day weighted average trading price of the Common Shares and a 57.0 per cent premium over the 10-day weighted average trading price of the Non-Voting Class B Shares, in each case as of July 11, 2006."

BGM is offering $47.25 for each non-voting share and $52.50 per share for voting stock.

The move would create a media powerhouse with strong interests in radio, television and newspapers -- though it is likely that the Canadian Radio-television and Telecommunications Commission (CRTC) will require the company to sell several of its television properties before it approves the purchase.

CHUM owns 33 radio stations and 12 television stations, including the Citytv and A-Channel stations across Canada.

In a memo to CTV staff, Fecan, who is also CEO of CTV Inc., said the company would divest the Access Alberta and A-Channel stations.

CHUM also owns 21 specialty stations, including MuchMusic and Bravo.

Fecan saw the mix of stations as being complementary, and he stressed the importance of keeping each brand unique. "We really think the differences are the key to the value," he said.

The news divisions will all be operated separately, he said.

"I think it's a great deal, a great opportunity for both companies," Fecan said. "I think Canada needs national champions and we're just so excited by the complementary fit about what CHUM has and what Bell Globemedia has."

The deal's genesis

The founder and controlling shareholder of CHUM, Alan Waters, died in December.

At the time, his son, Jim Waters, said the family -- which controls 88.6 per cent of the company's voting stock and 13.2 per cent of non-voting shares -- did not intend to sell the business.

However, he said he would be obligated to take any offers to the CHUM board for consideration.

Fecan said the Waters family approached Bell Globemedia.

"They picked the time that they decided they wanted to exit, and they called a number of people and held an auction for those assets," he told CTV Newsnet.

In addition to owning CTV and The Globe and Mail, Bell Globemedia has a 15 per cent interest in Maple Leaf Sports and Entertainment. That company owns the Toronto Maple Leafs, the Toronto Raptors and the Air Canada Centre, where both teams play in Toronto.

BCE Inc. owns 68.5 per cent of Bell Globemedia. Woodbridge Co. Ltd., which is the private holding company of the Thomson family, holds the remainder.

With a reorganization of BGM's ownership announced earlier this year, which is subject to the receipt of required regulatory approvals, Ontario Teachers' Pension Plan Board and Torstar Corporation will become shareholders of BGM along with BCE Inc. and The Woodbridge Company Limited.
 
The offer for CHUM will be made through a corporation owned indirectly by BGM's proposed reorganization shareholders.

Concentration concerns

"What this will do unfortunately, is reduce the number of media outlets that are available for production, for diversity of views in this country," said Stephen Waddell, executive director of ACTRA, Canada's performers union.

"This kind of media concentration is of great concern to Canada's professional performers."

Concentration of ownership in media has been an ongoing phenomenon in both Canada and around the world.

In late June, a Senate committee reported on the state of Canada's news media and warned the concentration of ownership in some markets had reached levels that few other countries would find acceptable.

"We're not saying that big is bad," said Sen. Jim Munson on June 21. "We just feel that the public has a right to be heard when big gets even bigger."

Fecan said new technology means his firm is competing with companies all over the world. "It's better to have strong Canadian companies than not have strong Canadian companies," he said.

Besides the CRTC, the deal must receive regulatory approval from the federal Competition Bureau.

With a report from CTV's Peter Murphy