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Nelvana to join the Corus for US$373 million

Toronto-based mediaco Corus Entertainment has announced a US$373-million cash-and-stock deal to buy cartoon heavyweight Nelvana. While Nelvana co-CEO Michael Hirsh says 'Nelvana was not for sale' before its negotiations with Corus, he notes the deal will allow the company further growth,...
October 1, 2000

Toronto-based mediaco Corus Entertainment has announced a US$373-million cash-and-stock deal to buy cartoon heavyweight Nelvana. While Nelvana co-CEO Michael Hirsh says ‘Nelvana was not for sale’ before its negotiations with Corus, he notes the deal will allow the company further growth, especially in developing specialty channels with global appeal.

In the current convergence frenzy, both companies’ boards have approved the deal, which will see Nelvana join Corus’s growing empire of specialty, pay and conventional TV channels, and radio stations. Corus holdings include Canadian kid specialty channels YTV and Treehouse TV, as well as interest in Family Channel. A presentation to analysts said that Nelvana will benefit from an anchor output relationship with Treehouse and YTV, including ‘increased and guaranteed windows.’ Another carrot for Nelvana is access to the Liberty Media partner network. With nearly US$55 million in 1999 production, Nelvana ranks as one of Canada’s largest indie prodcos.

With 23 series (including 10 new ones) airing on State-side broadcast or cable channels this fall, Nelvana is, according to Hirsh, the U.S.’s single largest supplier of toons for kids and adults, larger even than Disney.

In the Nelvana package, Corus acquires some 1,650 library episodes by the end of 2000, plus eight feature films, ongoing production rights to the majority of Nelvana’s series, exploitation rights to characters such as Babar, Franklin, Pippi Longstocking, Rupert and Donkey Kong, and a 20% stake in bilingual Canuck specialty broadcaster Teletoon. The latter asset could spell potential trouble for Corus since Canadian broadcast regulator the CRTC must give its blessing every time a single owner acquires more than 10% holding in a cable channel. Nelvana’s 20% of Teletoon, coupled with Corus’s 20%, would bring Corus to 40%.

Corus president and CEO John Cassaday says there will be no layoffs, and Nelvana senior execs are staying in place.

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