Bidding War Brewing for Stock of Valley Cable TV’s Toronto Parent
A possible bidding war emerged Wednesday for Standard Broadcasting of Toronto, the parent of Chatsworth-based Valley Cable TV Inc., as a second Canadian broadcaster disclosed tentative plans to make an 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 by another company.
Valley Cable serves about 56,000 subscribers in the western San Fernando Valley and the City of San Fernando. 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.
Agreement Reached in May
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, and make a tender offer for the other 51%. Standard Broadcasting is now owned by Toronto-based Hollinger Argus.
The Slaight offer was $21.50 (Canadian) a share, or $93 million at current exchange rates.
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.
But he said that Valley Cable’s franchise makes ownership of the company, at first glance, “an attractive proposition.”
Valley Cable has suffered from the low revenue and high start-up costs that plague nearly all young cable companies. Valley Cable officials, however, say their subscriber list is growing quickly and that the company is moving steadily toward profitability.
Engle said Selkirk Communications’ offer for Standard Broadcasting hinges partly on whether Selkirk receives approval to proceed today from the Ontario Securities Commission. He said 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.
Commission Has ‘Mandate’
But Peter Searle, a senior vice president for finance and administration with Standard Broadcasting, said he “would be very surprised” if the securities commission failed to clear the way for Selkirk Communications to launch its tender offer. He explained that the commission has “a mandate” to champion shareholders’ rights.
Selkirk Communications, which is nearly twice the size of Standard Broadcasting, has interests in television, radio and cable television in the United States, Canada and England. The company’s only holdings in the United States now are seven cable television franchises in Fort Lauderdale and Hallendale, Fla.
Engle said that Standard Broadcasting, whose interests are concentrated in eastern Canada, would be “a perfect fit” with Selkirk Communications, most of whose television and radio stations are in western Canada.
Executives of Slaight Communications could not be reached for comment.