By Connie Thiessen
A group of minority shareholders has formally filed its opposition to Corus Entertainment’s proposed $500-million debt-for-equity recapitalization plan, urging the CRTC to demand full transparency or reject the takeover entirely.
As part of the recapitalization plan, Corus is seeking to move its CRTC licences to a new company. The majority shareholders of that newco will be lenders who will forgive approximately $500 million worth of debt hanging over the media company. The transfer would end control by the Shaw Family Living Trust and position investment firm Canso Investment Counsel Ltd. as the largest single shareholder with a 44.85 per cent voting stake. The regulator launched a proceeding on the proposed transfer last month.
In an intervention submitted this week, the minority coalition – representing over 10 million Class B shares (approximately 5 per cent of the class outstanding) – warned that the deal threatens local news, lacks editorial safeguards, and leaves effective control of a massive Canadian media footprint in the hands of unidentified financial investors.
The proposed transaction has already received court approval under the Canada Business Corporations Act, despite a vote by Class B shareholders falling short of the required numbers. While 99.9 per cent of votes cast by senior noteholders were in favour, alongside 99.7 per cent of Class A shareholders, Class B shareholders voted just 61.2 per cent in favour. At least two-thirds (66⅔ per cent) was required to pass the resolution.
Corus – which operates Global News, 36 radio stations, and 25 specialty TV channels – has maintained that the deal is a vital lifeline necessary to combat falling advertising revenues and aggressive streaming competition. However, the shareholder group, represented by Sébastien Ouellet and Christian Thibault of Restock Canada, argues that the public interest is being sidelined for creditor self-preservation.
“Our group opposes the application for a change in effective control of Corus, believing that the transaction raises major concerns regarding the public interest, diversity of voices, and the sustainability of the Canadian broadcasting system,” the group stated in its filing.
The shareholder intervention highlights several concerns regarding the structure and intent of the new ownership group, including Canso reportedly refusing to disclose the identities of eight of its backend investors despite a direct inquiry from the CRTC; a lack of media expertise on the part of Canso, which is an investment fund focused on capital recovery; and worries about the loss of job security and regional coverage across Canada.
“Because the transaction creates financial incentives that favour cuts over the maintenance of local service, it is to be expected that following the change of ownership, Corus will proceed with station closures and staff reductions,” the shareholder group expressed.
Demands for a public hearing, tangible benefits
Given that Corus employs roughly 2,300 people and generates $1 billion in annual revenue, the coalition is demanding that the CRTC transition its review into a comprehensive public hearing so all impacted parties can cross-examine the applicants. A request for a hearing was also made by Quebecor Media, which the commission turned down earlier this month.
The group is also opposed to Corus’ request to be exempted from the CRTC’s standard “tangible benefits” policy, which would inject 6 per cent to 10 per cent of the transaction’s value directly back into Canadian content creation.
“Granting an exemption…would deprive the broadcasting system of the trade-offs normally required during such a transfer of control,” the coalition argued, stating it would set a dangerous precedent where internal corporate mismanagement overrides the legal objectives of the Broadcasting Act.
The shareholder group also isn’t happy that Corus leadership failed to look for alternative solutions, claiming that executive leadership fast-tracked a wholesale handover to lenders rather than attempting to sell off partial asset groups to other Canadian media buyers.
“Failing satisfactory answers to these concerns and appropriate commitments from the applicants, we respectfully submit that the Commission should reject this application for a change in effective control of Corus Entertainment Inc.,” the group concluded.
