Friday, February 12, 2010 5:26 PM
Mixed reviews for Shaw
Andrew Willis
Shaw Communications’ bid for the television assets at CanWest Global Communications looks like one of those strategic moves that splits the investor community.
Shaw got a thumbs down Friday from Desjardins Securities for a deal that will see the cable and satellite TV company take up to an 80 per cent voting interest in the owner of specialty TV networks and conventional broadcaster Global.
“We consider the acquisition to be slightly negative from a shareholder's perspective, assuming a reasonable price is agreed upon,” said Desjardins analyst Maher Yaghi in a report. “We would have preferred Shaw to concentrate on its plans to deploy a new wireless network in Western Canada rather than buy into a media business.”
The Desjardins analyst argued that Shaw commands a premium market valuation, due to the strength of its cable operations.
“In our view, a potential downside to this transaction is that investors could be unwilling to continue paying such a premium multiple given the company is now reinvesting some of its cash flow in a media business, which may not earn as high a return as its core cable business,” said Mr. Yaghi.
Other dealers have sounded a more approving tone, noting that Shaw is paying very little for a strong media franchise. Terms of this CanWest purchase from creditors have not been released, but the deal is expected to be cost Shaw less than $100-million.
