Shaw Gets Mountain Cablevision

Recently, Shaw Communications (SJR - Analyst Report) announced that it has entered into a strategic agreement to acquire Mountain Cablevision Limited, based in Hamilton, Ontario and owned by the Boris Family.

The Boris family has been running the business for the last fifty years, which has approximately 41,000 cable subscribers, 28,000 Internet users and 27,000 telephone customers.

Shaw’s management declared that the purchase consideration will consist of cash and may also involve the issue of Class B Non-Voting Participating Shares of the company. The transaction is subject to approval by the Canadian Radio-Television and Telecommunications Commission (CRTC). The terms of the transaction were not disclosed.

Shaw has a strong foothold in western Canada, and the acquisition of Mountain Cablevision will allow the company to tap the market beyond western Canada into mostly eastern Canada, where the company has lower brand recognition. The move has given Shaw a stronghold in what used to be solely a Rogers Communications (RCI - Analyst Report) market.

Shaw’s ongoing capital investments have helped it to expand its operations to include digital programming, Internet, Video-on-Demand (VOD), High Definition Television (HDTV), and digital phone. The company experienced subscriber growth across all its operations during the recently reported third quarter. Basic cable net subscriber additions were 9,622 to 2,283,526, Digital customers increased 110,810 to 1,187,183, and Internet and Digital Phone lines climbed by 24,625 to 1,650,959 and 54,633 to 774,009, respectively. DTH subscribers rose 1,580 to 898,213.

Overall subscriber growth in 2009 is faring better than 2008 and 2007. The growth rates are consistent with the historical trends. We maintain our Hold recommendation on the stock with a six-month price target of $16.75.