Analysts: New Canadian cross-ownership rules will hurt media stocks
By Leah McBride Mensching, Friday 18 January 2008 at 19:36 :: Media Ownership :: #1122 :: rss
New regulations announced earlier this week by the Canadian Radio-television and Telecommunications Commission (CRTC) that aim to limit cross-ownership of newspapers, television and radio and limit media consolidations are most likely to hurt mid-sized media companies and those looking to sell shares to the public, the Financial Post reported Friday.
Privately-held CTVglobemedia (owner of The Globe and Mail), Torstar Corp. (The Toronto Star) and Corus Entertainment Inc. could all fall victim to the new policy, according to an informal survey of analysts, the Post stated.
Two analysts that did not want their identities revealed told the Post it is unlikely that any initial public offering of CTVglobemedia will come with as rich a valuation as it would have a year ago, when it was in its last round of media consolidation.
“It looks like CTVglobemedia missed the top to go public,” one of the analysts said, according to the Post. The owners of CTVglobemedia “can't be too happy these new rules limit CTVglobemedia from growing,” he added.
The media company's major shareholder is Woodbridge Co. Ltd, which is owned by the Thomson family in Toronto. Other shareholders include the Ontario Teachers' Pension Plan and Torstar.
Torstar is already facing a strike at its flagship, The Toronto Star.
“Cross-ownership rules significantly limit the number of potential buyers for The Toronto Star,” UBS Analyst Eric Mencke wrote in a note to clients.
The new CRTC rules bar a potential Torstar buyer, Rogers Communications, from purchasing the company. Rogers owns radio stations in Toronto and recently bought television station Toronto Citytv from CTVglobemedia, and the rules state media companies are allowed to own only two types of media in a single market.
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