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TORONTO — Struggling media company Corus Entertainment Inc. has received a lifeline.
The Canadian Radio-television and Telecommunications Commission on Thursday granted regulatory approval for a recapitalization plan that would see a change in ownership and shift effective control of all licensed programming services operated by the company and its subsidiaries.
Corus had indicated to the CRTC that the proposed deal is necessary to address its high debt load and improve its financial stability so it could continue to operate.
In a summary of the CRTC’s decision, the regulator said Corus is facing “significant financial challenges” from both broader industry pressures and its capital structure.
“The commission notes that the severity of those challenges threatens the continued viability of Corus’s operations and risks the loss of a key contributor to the Canadian broadcasting system,” the summary reads.
The CRTC said that in its view, the proposed transaction will help ensure the company remains part of the Canadian broadcasting industry.
“The commission notes that news services across Canada continue to face significant pressures, and considers that the continued availability of Corus’s news and information services – including those provided through its radio stations – serves the public interest,” the summary reads.
Corus owns 25 specialty television services and 15 conventional stations, 36 radio stations, as well as digital and streaming platforms.
In August, the company made cuts to its TV and radio operations, saying at the time the changes were difficult but necessary to ensure its teams are structured in a sustainable way, while minimizing disruption to local news and audio delivery. The company said the changes included jobs at Global BC, Global National, News 640 and talk radio.
Under the recapitalization proposal, first announced in November, some of Corus’s lenders would forgive approximately $500 million in debt in exchange for 99 per cent ownership of a newly created parent corporation, called NewCo, that would wholly own Corus and its services.
Existing Corus shareholders would be expected to swap their holdings for shares that together would represent the remaining one per cent of the new company.
Corus said its business is expected to continue as normal with no anticipated effect on its obligations to clients, producers, suppliers or employees.
The reprieve comes amid significant financial struggles for Corus, which last month reported a net loss attributable to shareholders of $36.5 million in its third quarter, as its revenue for the period fell 16 per cent compared with last year.
