Quebecor still interested in buying Corus; Corus has supporters for recap plan
By Ahmad Hathout
Approving the transfer of Corus’s licensed services to a new company that will be controlled by a group of debt holders will threaten the viability of the largest independent private broadcaster in the country, Quebecor Media is claiming to the CRTC.
To relieve $500 million in debt, Corus agreed to transfer its assets to the new company (NewCo) which will be listed on the Toronto Stock Exchange and be majority held by Canadian investment funds, including Canso Investment Counsel Ltd. The CRTC launched a consultation in May to decide on the transfer, which Corus said will also bring initial annual cash interest savings of up to $40 million and other financial benefits.
However, Quebecor, which has expressed interest in buying Corus, is urging the CRTC to reject the deal – valued by PricewaterhouseCoopers at about $328 million – because the prospective owners allegedly don’t have experience in the broadcasting sector.
“In practice, this transaction would place Corus under the effective control of a group of unsecured creditors converted into shareholders, led by Canso, which would hold approximately 44% of the voting shares of NewCo,” Quebecor says in its submission.
“Canso’s track record in the print media sector is, to say the least, troubling,” it continues. “For example, it played a significant role in the corporate restructurings of Postmedia (owner of the National Post, the Montreal Gazette, and over 110 national and local media outlets), where its involvement resulted in major cuts and persistent structural difficulties. This raises serious questions about whether Corus — which has already undergone a 25% workforce reduction since 2024, in addition to the closure of eight programming services and three radio stations over the same period — might face a similar fate.”
Canso did not respond to a request for comment.
Quebecor said it wants the CRTC to hold a public hearing on the matter to “fully examine the available alternatives” to the recapitalization plan. The company alleges that “neither Corus, nor Canso, nor the financial institutions involved have followed up” on its interest in purchasing the media company.
“A serious review of this proposal is warranted,” Quebecor says. “This lack of openness to an offer from an experienced Canadian player, firmly established in the broadcasting sector with a long-term strategic vision, raises questions about the rigour and fairness of the process that led to the proposed transaction,” Quebecor claims.
Quebecor also claims that while the new company would be widely held with no majority shareholder, it is still murky as to who the beneficial owners of the company will be.
“This opacity is all the more concerning in that it prevents an adequate assessment of whether the shareholders in question satisfy Canadian ownership and control requirements, or an understanding of the true origin of the capital mobilized in connection with the transaction,” Quebecor claims.
“If the Commission genuinely wishes to ensure Corus’s viability and preserve its assets for the benefit of the Canadian broadcasting system, it should favour a takeover solution led by one or more parties with deep industry knowledge and demonstrating a genuine commitment to the development and long-term sustainability of the broadcasting group.”
A group of minority shareholders in Corus have also asked the CRTC to reject the deal, which received Ontario court approval, because it allegedly threatens local news, lacks editorial safeguards, and leaves effective control of a massive Canadian media footprint in the hands of unidentified financial investors. While 99.9 per cent of votes cast by senior noteholders were in favour of the recap plan, alongside 99.7 per cent of Class A shareholders, Class B shareholders voted just 61.2 per cent in favour.
Corus is further asking that the CRTC forgo, as a condition of approval, imposing an amount to be earmarked for Canadian content funds, called tangible benefits, because the transaction is an internal restructuring of a failing company with no cash payment – just a debt-to-equity conversion at a loss to the creditors. In other words, it argues the transaction has no value for there to be tangible benefits.
If the CRTC approves the transaction, Quebecor and others, including the Canada Media Fund (CMF) and the Canadian Media Producers Association (CMPA), are calling on the CRTC to reject this request.
Quebecor, which estimates the value of the prospective benefits to be in the tens of millions of dollars, argues that the debt-to-equity conversion “alters the distribution of economic rights and confers upon the new shareholder group effective control over a high-value portfolio” including 15 television stations, 25 discretionary services and 36 radio stations.
“The value of these assets cannot simply disappear by virtue of the transfer being structured as a debt conversion,” Quebecor says. “To hold otherwise would be to say that the value of a broadcasting asset becomes zero the moment its owner faces financial difficulties — a proposition that is manifestly contrary to any economic logic.”
If the CRTC approves the transaction with no tangible benefits, Quebecor is warning that this could create a “loophole” wherein “parties could structure acquisitions of distressed companies as debt restructurings in order to evade their regulatory obligations,” which is what the CMF also argues.
The CMF adds that Corus doesn’t meet the criterion to show that it has suffered significant financial losses in five consecutive years and that the commission has never before accepted a zero-dollar valuation in prior transactions.
“Given [Corus’s] historical leadership in children’s and youth programming and the significant challenges this content currently faces, the CMF would encourage Corus to give particular consideration to children’s and youth content in structuring its package,” the CMF concludes.
The CMPA argues that Corus does not meet the “failing undertaking” bar for the CRTC, arguing Corus “remains a large, integrated” media group “with diversified revenues” that has “rationalized services,” obtained temporary regulatory relief in the form of reduced programs of national interest (PNI) spend, and has “sufficient financial capacity to negotiate complex recapitalization arrangements.”
The Writers Guild of Canada (WGC) and the Directors Guild of Canada (DGC) also ask the CRTC to reject a complete exemption on tangible benefits. If it does decide to exempt, they ask that company put some amount into it. WGC is asking the CRTC to only apply the exception to the specific undertakings that suffered significant losses over the requisite number of years.
The CMPA asks that any flexibility with tangible benefits be conditioned on Corus “advancing a package of commitments that meaningfully reinvests in Canadian programming and contributes to the revitalization of its services,” which could include targeted expenditures on Canadian content “that are complementary to existing regulatory obligations.”
The WGC, DGC and CMPA are also asking that, if the CRTC approves the plan, that it ensure that the new company retain all of Corus’s past conditions of licence and service, including reporting and spending obligations, such as on PNI.
On the other side are the supporters of the plan.
“Corus has been an important and consistent partner for Canadian-owned production companies, and remains one of the few independent Canadian broadcasters with the scale to support meaningful commissioning and acquisition opportunities across a range of genres,” Blue Ant Media, which supplies content to Corus, says in its submission.
“The proposed transaction would place Corus on stronger financial footing at a time when Canadian broadcasters are under significant financial pressure,” it adds. “It would help preserve Corus’s ability to operate its services, invest in programming and continue working with Canadian production partners. In Blue Ant’s view, that outcome would benefit both Canadian audiences and the broader Canadian production ecosystem.”
Stingray also supports Corus’s application, which it argues would put it on a “stronger footing” and also backs its tangible benefits request. The media company, in fact, argues that the CRTC should do away with the benefits policy “as soon as possible” because it’s “antiquated” in that it’s applied unevenly.
Indeed, the CRTC has been exploring other ways to support the broadcasting system outside of tangible benefits.
Canada’s largest private sector union, Unifor, members of which are employed at Corus, also supports the media company’s application, including its tangible benefits request – with some guidelines.
“Unifor respectfully recommends that the Commission sets conditions on Corus that the company will not implement any outlet closures, lay-offs, operational downsizing, or reductions in head count,” the union said in its submission. “Further, Corus should be prohibited from any further operational consolidation or central casting, where locally created news is consolidated into regional broadcasts.”
The money Corus would save from a tangible benefits obligation could be put toward “additional investment in local news operations that are located in currently under-served markets,” Unifor adds.
The Forum for Research and Policy in Communications (FRPC), a public interest organization, supports Corus’s application, but on the condition that the CRTC imposes “enforceable and enforced conditions of service to ensure that the Company’s continued existence serves to implement Parliament’s Broadcasting Policy for Canada.”
The reason for the condition, the FRPC says, is “primarily because Corus’s application lacks any relevant evidence about its past performance, current position and future plans.”
The organization blames the CRTC for allegedly not using its information-collection powers to unmask the anonymous “parties seeking to control a major Canadian broadcaster.”
“The CRTC’s failure to obtain clear answers from the Company about its prospective owners raises grave concerns that approval of this transaction may not serve Parliament’s Broadcasting Policy for Canada in any way – but will rather result in quick-return ‘strip mining’ (so to speak) of the company’s assets,” the FRPC claims, adding a public hearing, as suggested by Quebecor, “might have gone a very long way to assuage strip-mining concerns and to explaining why the absence of clear, relevant facts about the impact of the transaction does not support its approval.”
And while the FRPC says it is “not immediately opposed” to exempting Corus from paying tangible benefits, “no facts on the public record support the transaction’s value as being zero. If Corus’ continued survival is the ‘intangible benefit’ the public may receive by enabling the company to continue its broadcasting operations, Corus must demonstrate precisely how the public interest will be served.”
The Community Radio Fund of Canada (CRF), a non-profit supporting local radio and online broadcasting, said it has no objection to the transaction, but Corus should be required to show how an exception to the tangible benefits policy serves the public interest “beyond facilitating the company’s financial restructuring.
“The Commission should not create a pathway by which a company can structure a change in effective control as a debt restructuring, assign the transaction a nominal or zero value, and thereby avoid public-interest contributions that would ordinarily arise under the tangible benefits policy,” the CRF argued.
The Canada Deaf Grassroots Movement (CDGM) submits that it does not oppose the transaction, but says that approval must be contingent on “clear accessibility-related requirements and safeguards to ensure” Canadians who are deaf, hard of hearing and deafblind, “are not negatively affected by the proposed change in ownership and effective control.”
Corus leveraged intervenor support to bolster its case.
“As noted by several interveners, Corus plays a vital role in Canada’s cultural sector as the country’s largest independent broadcaster, supported by a strong and attractive portfolio of assets, including our #1 specialty channels, digital offerings, and trusted news broadcasts and websites,” a Corus spokesperson said in a statement to Cartt. “Following court approval of the proposed Recapitalization Transaction in March, we were encouraged to see more than 40 parties from across Canada express support for our application to the CRTC last week. We look forward to providing our formal reply as part of the process on Monday, July 6.
“As previously stated, following a robust and comprehensive review with external financial and legal advisors, the Board determined that the Recapitalization Transaction represents the best available path forward for Corus and its stakeholders. That view has not changed.”
