UPDATE 2-Canada's Shaw Communications sells media arm to Corus for C$2.65 bln

(Adds details and background, analyst comment)
By Euan Rocha and Alastair Sharp
TORONTO, Jan 13 (Reuters) - Canada's Shaw Communications Inc
SJRb.TO said on Wednesday that it would sell its media unit to
Corus Entertainment Inc CJRb.TO for C$2.65 billion ($1.9
billion), gaining funding for its Wind Mobile purchase and
sending its shares up nearly 7 percent.
Corus, which operates a network of Canadian radio stations
and prominent children's television channels including YTV,
Nickelodeon and Cartoon Network, will add channels like National
Geographic, Food Network Canada, and HGTV Canada, boosting its
family entertainment offerings.
Corus, which was spun off from Shaw more than 15 years ago
will also be acquiring the Global television network in the
cash-and-stock deal. The Shaw family still holds majority
control of both companies.
"This combination fits like a glove," Corus Chief Executive
Officer Doug Murphy said on a conference call. He added that the
deal would let the company achieve significant operating
efficiencies and gain access to new markets to drive growth.
Corus shares were up 2.4 percent at C$11.90 in morning
trading, while Shaw jumped 6.6 percent to C$25.12.
The transaction is the latest in a flurry of activity in the
typically staid Canadian telecom and media industry.
Last month, Shaw struck a deal to acquire Wind Mobile, the
country's fourth-largest wireless company, for C$1.6 billion.
Earlier in 2015, Rogers Communications Inc's RCIb.TO bought
smaller rival Mobilicity for C$465 million.
Shaw will get about C$1.85 billion in cash and 71 million of
Corus Class B shares.
In a note, Desjardins analyst Maher Yaghi dubbed Shaw's move
to refocus "a better direction for the company and its
shareholders in the long term."
The diversification the deal brings to Corus' portfolio of
channels also strengthens it ahead of regulatory changes that
will offer Canadians more freedom to pick and choose channels.
The changes mean that cable and satellite providers will
have to offer viewers an affordable basic package of channels
and let them to choose others.
Most distributors currently package groups of channels into
thematic bundles, which they say means more choice is available
at a lower per-channel cost. Consumer advocates complain that
viewers are forced to pay for channels they never watch.
Corus' portfolio after the deal closes will include 45
specialty television channels, 39 radio stations, 15
conventional television stations, and other assets.
The companies expect the deal to close in the third quarter,
and Corus said it would immediately add to earnings and free
cash flow on a per-share basis.
($1 = C$1.42)