Second Bid Likely for Parent of Valley Cable

A possible bidding war emerged Wednesday for Standard Broadcasting, the Toronto-based parent of Chatsworth-based Valley Cable TV, as a second Canadian broadcaster disclosed tentative plans to make a tender offer for Standard Broadcasting’s stock.

Selkirk Communications of Toronto said it wants to offer $24 (Canadian) a share for all of Standard Broadcasting’s 5.9 million common shares. At the current exchange rate, the offer would be worth $104 million in U.S. dollars.

The expected tender offer could derail an already complicated preliminary agreement announced last month for the acquisition of Standard Broadcasting.

In May, a conditional agreement was reached for Slaight Communications, a privately held Toronto company, to buy a controlling stake of 49% in Standard Broadcasting now owned by Toronto-based Hollinger Argus and make a tender offer for the other 51%. The Slaight offer was $21.50 (Canadian) a share, or $93 million (U.S.) at current exchange rates.

Right to Sell Back Firm

That deal also gave Slaight Communications the option of severing Valley Cable from the rest of Standard Broadcasting and selling it back to Hollinger Argus. If Slaight Communications exercised that option, Valley Cable would find itself owned directly by the company that now, in effect, is its corporate grandparent.

Rafe Engle, president and chief executive of Selkirk Communications, said he also wants the right to break off Valley Cable and sell it back to Hollinger Argus because of Valley Cable’s losses since it began operations in 1981 and because of his lack of familiarity with the company.

“It’s a matter of what we don’t know,” Engle said.

He added that Valley Cable’s franchise in the western San Fernando Valley and in the city of San Fernando makes ownership of the company, at first glance, “an attractive proposition.”

Valley Cable, which serves about 56,000 subscribers, has suffered from the low revenue and high start-up costs that plague nearly all young cable companies. Valley Cable officials say, however, that their subscriber list is growing quickly and that the firm is moving steadily toward profitability.

Frank McNellis, Valley Cable’s general manager, said the bidding for Standard Broadcasting is having no effect on the day-to-day operations of Valley Cable.

Circumvent Provisions

Engle said Selkirk Communications’ offer for Standard Broadcasting hinges partly on whether it receives approval today from the Ontario Securities Commission. He said that Selkirk Communications asked the securities regulators for a way to circumvent provisions in the previous agreement between Slaight Communications and Standard Broadcasting that would lock out a competing bid.

Unless securities regulators take such a step, executives familiar with the bid said, Slaight Communications’ proposed acquisition of Standard Broadcasting probably is too far along to be stopped.

But Peter Searle, a senior vice president for finance and administration with Standard Broadcasting, said he “would be very surprised” if the securities commission fails to clear the way for Selkirk Communications to launch its tender offer. He explained that the commission has “a mandate” to “champion” shareholders’ rights.

Engle said that Standard Broadcasting, whose interests are concentrated in eastern Canada, would be “a perfect fit” with Selkirk Communications.

Executives of Slaight Communications could not be reached for comment.