For Quebecor, acquiring Corus could generate operational synergies by reducing operating costs and increasing its purchasing power when acquiring content, the source said.Tijana Martin/The Canadian Press
Quebecor Inc. QBR-B-T has made an offer to buy Corus Entertainment Inc. CJR-B-T but the financially distressed media company appears unwilling to engage with the offer, according to a source.
Representatives of Quebecor met approximately six months ago with Corus executive chair Heather Shaw, according to the source.
That meeting was followed by a purchase offer several weeks ago, the person said. However, Corus has not responded to Quebecor’s overtures, according to the source, who did not specify terms of Quebecor’s offer for the company nor any details around how the deal would be structured.
For Quebecor, acquiring Corus could generate operational synergies by reducing operating costs and increasing its purchasing power when acquiring content, the person said.
The Globe and Mail is not identifying the person because they are not authorized to speak publicly about the matter.
Melissa Eckersley, a spokesperson for Corus, said the company does “not comment on rumours or speculation.“
”We have an important role to play in the Canadian media and content industry and – as previously announced – are focused on our go forward plan for Corus, which builds on our valuable assets and deep expertise across platforms,” Ms. Eckersley said in a statement provided to The Globe.
Véronique Mercier, a spokesperson for Quebecor, said in a statement that the company does “not comment publicly on potential acquisitions, as this information is of a competitive and forward-looking nature.”
Toronto-based Corus owns Global News as well as dozens of television and radio stations across the country.
Montreal-based Quebecor owns TVA Group Inc., which operates a television network as well as a number of specialty channels and has 42-per-cent market share in Quebec.
Earlier this month, Corus got an extension from its bankers, giving it until Oct. 15 to resolve its debt crisis.
Ratings agency Morningstar DBRS downgraded Corus from B to B (low) on Monday, citing concerns about the company’s liquidity position owing to the higher seasonal working capital needed to secure programming for the coming season as well as continued pressure on Corus’s operating results.
Corus, which is carrying more than $1-billion of debt, has been aggressively trimming costs, including a recent work-force reduction of more than 800 jobs, or 25 per cent of its work force. Most of its debt is due for repayment within the next few years, with $290-million in bank debt set to reach maturity in 2027 and $500-million in bonds due the following year.
The company has been under mounting pressure since June, when Corus was informed that Warner Bros. Discovery Inc. WBD-Q would not renew its Canadian rights to five popular specialty channels, including HGTV and Food Network, when its current deal expires at the end of this year. Corus rival Rogers Communications Inc. RCI-B-T said it had won the rights to that content starting in 2025.
Corus only has about $30-million available through its secured revolving credit facility until mid-October, which Morningstar DBRS said was a “relatively modest” sum that “may impinge on the company’s ability to invest in new programming in the seasonally heavy first fiscal quarter of 2025.”
While Corus will continue to hold the rights to the Canadian content featured on the Warner channels that will be going to Rogers, the ratings agency said the loss of the HGTV and Food Network brands “is expected to create additional uncertainty around Corus’ programming supply.”
“Morningstar DBRS believes securing new lifestyle content to add to the existing Canadian content may place added pressure on Q1 F2025 cash flow as these rebranded channels are expected to launch on Jan. 1, 2025.”
Corus could face another downgrade in as little as one month. If Corus is unable to negotiate another extension with its lenders for at least 12 months before its Oct. 15 deadline, or if the company launches a debt-restructuring process, Morningstar DBRS said, “a negative rating action will likely occur.”
Before receiving an extra six weeks from its lenders to solve its debt problems, Corus was on course to default on the terms of its lending agreements as of Sept. 1. Under its previous debt agreements, the company would have seen its debt-to-EBITDA ratio drop to a maximum of 4.25 as of that date, meaning total debt could not exceed 4.25 times its annual operating income.
Corus acknowledged in July that it was on course to surpass that threshold, warning that such an outcome “may cast significant doubt about the company’s ability to continue as a going concern.”
Corus was previously allowed to carry as much as 4.5 times its operating income in debt. The extension agreement allows for a ratio of up to 4.75 until mid-October.
The Shaw family, who sold their namesake cable and internet provider to Rogers for $20-billion last year, holds a class of Corus shares granting them roughly 86-per-cent voting control of the company.