Business Notes

September 20 1999

Business Notes

September 20 1999

Business Notes


Media moguls at the altar

In the biggest media merger ever, Viacom Inc. is set to acquire CBS Corp. for $55 billion in stock. If the deal gets regulatory approval, the combined company would be the number 2 media firm in the world, with a stock market value of $106 billion, second only to Time Warner Inc., which is valued at $119 billion. Viacom’s media holdings include the Paramount film studios, cable networks MTV, VH1 and Nickelodeon, and the Blockbuster video chain. With CBS, it would gain a major TV network and the largest group of radio stations in the United States.

As interesting as the deal is the unfolding drama of its leadership. Viacom’s chairman, Sumner Redstone,

would be chief executive of the merged entity, ceding the running of the company to CBS’s Mel Karmazin, who would be the president and chief operating officer. Observers are asking whether even a behemoth can house two such driven individuals—and two such differing styles. Redstone, 76, adores film and TV parties, while Karmazin, his 56-year-old heir apparent, inclines to takeout pizza.

Airline takeover fight heats up

Air Canada investors are savouring the prospect of an all-out bidding war for the airline as the carrier tries to fend off a takeover bid by Toronto financier Gerry Schwartz. In documents delivered to Air Canada last week, Schwartz’s Onex Corp. outlined its plan to acquire cash-strapped Canadian Airlines and merge it with the more successful carrier. But Air Canada dismissed the bid as “belowmarket,” and rumours swirled that the airline is rounding up global partners for a counteroffer. Several large Bay Street brokerage houses purchased large blocks of Air Canada shares, a move widely seen as a prelude to a counterbid.

Jobs on the slide

Canada's job market slumped in August with the number of full-time jobs in the economy falling by 35,000. The unemployment rate rose slightly to 7.8 per cent, an increase of one-tenth of a a percentage point from July. But economists predict that job creation will pick up in coming months because of healthy growth in the economy.

Ford is the test model

Canadian Auto Workers union president Buzz Hargrove announced that Ford Motor Co. of Canada is the union’s first strike target in its talks with the Big Three automakers. The strike deadline for the 12,930 CAW members at Ford is midnight of Sept. 21. Under so-called pattern bargaining, the initial contract becomes the template for negotiations with the other auto firms. Key among the issues for the CAW are improvements to the pension plan.

Taking the TSE reins

To face the competitive world of electronic trading, the Toronto Stock Exchange has picked Barbara Stymiest, its former chairwoman, as its president. Stymiest, the chief financial officer of the brokerage firm Nesbitt Burns, got the nod following a global search.

Molson sheds staff

Molson Inc. has fired 287 people or 18 per cent of its salaried employees, delivering on a promise to shareholders to cut costs. Marketing and sales staff in the Toronto-based North American operations bore the brunt of the cuts. The move will result in a one-time accounting charge of $36 million.

Unlocking WIC

Tired of waiting for Can West Global and Shaw Communications to agree on carving up WIC Western International Communications Ltd., the Canadian Radio-television and Telecommunications Commission has called for public hearings next month. Shaw Communications Inc. gained 52 per cent of WIC early in 1998, but a deadlock emerged because rival CanWest Global Communications Corp. owned 46 per cent.

Financial outlook

Canadians can look forward to above-average economic growth over the next five years compared with people in the rest of the industrialized

world, a major think-tank predicts.

The 29-nation Organization for Economic Co-operation and Development expects that Canada’s economy will expand at an annual rate of 2.75 per cent through 2004, compared with a predicted average of 2.5 per cent for the OECD as a whole. The OECD says rising consumer confidence, tax cuts and favourable interest rates should more than offset a decline in export growth.

The scenario painted by the OECD marks a considerable improvement over Canada’s economic performance so far this decade.