French Canadian media giant takes a giant step into television
French Canada's media giant, Power Corporation of Montreal, is more giant than ever. Power Corporation last week bought 41 percent of Tele-Metropole, which owns the largest French-speaking TV station in Canada, Channel 10 in Montreal. Power already has La Presse, Montreal's upscale French-language daily.
Power is the main holding company for Paul Desmarais, who started his empire with a bankrupt bus company in the northern Ontario mining town of Sudbury and now has an estimated worth of C$500 million. Mr. Desmarais owns 28.6 percent of Power equity but controls 60.6 percent of the votes, because some classes of shares carry more votes than others.
The conglomerate is divided into three parts: money, paper and packaging, and publishing and broadcasting.
Power Financial, the money arm, is 70 percent owned by the holding company.
It owns 55 percent of Montreal Trustco, banking and real estate services; 96 percent of the Great West Life Assurance Company; and 96 percent of the Investors Group, which operates 11 mutual funds and is the largest such group in Canada.
The company consolidated its financial services last year in preparation for new banking laws in Canada that would allow financial supermarkets to offer banking, insurance, and brokerage functions all at once.
Power owns 40 percent of Consolidated-Bathurst Inc., a pulp and paper company, producing about a million tons of newsprint every year. It also has packaging subsidiaries, making plastic and glass bottles, in Canada, the United States, and Europe.
Gesca Ltd., a wholly owned subsidiary, handles the publishing interests of Power Corporation. It issues La Presse and three other daily newspapers in Quebec, along with eight weeklies.
Desmarais also has interests in a string of TV and radio stations in Quebec and neighboring Ontario.
To this Power Corporation now adds Tele-Metropole. The big prize is CFTM, Montreal's only commercial French-language station (the other commercial station is the English-language CBC). ``Canal Dix,'' as it's known, is the market leader. It creams the highbrow competition with ``La Vie,'' a locally produced soap opera, and ``Dynasty,'' which is dubbed into French.
CFTM is a big money earner. With 1985 profits estimated at C$18 million, Montreal communications analyst Michel Perreault calls it the richest TV station in Canada. It cost Desmarais C$98 million for the 41 percent interest in Tele-Metropole. ``It was a bargain,'' Mr. Perreault says.
And Tele-Metropole is more than CFTM. It has interests in a string of radio and TV stations across Quebec as well as a share of an oil and gas exploration firm in western Canada.
It is not certain which part of the Power empire will operate the Tele-Metropole. ``Right now it's Power that has bought it,'' says Andr'e Desmarais, son of the boss and the vice-president in charge of the communications holdings.
Power Corporation has bigger problems than where to slot its new investment. The Canadian Radio-Television and Telecommunications Commission has the say on who is allowed to own what in the radio and television business. Getting that CRTC approval could take several months.
According to the CRTC's past utterances, the ownership of newspapers and radio and TV stations should be separate.
But Paul Desmarais may get a regulatory dispensation. He is a close friend of another Montreal businessman, Brian Mulroney, who is now prime minister of Canada.