Quebec-based broadcaster TVA is in takeover talks with Montreal production and distribution company Motion International.
If it goes ahead, the $85m (C$125m) union would create Canada's second largest production company after Alliance Atlantis Communications.
TVA, a subsidiary of cable operator Group Videotron before that company was taken over by Rogers Communications, is on the look-out for content creators and libraries. A takeover of Motion would continue the trend amongst Canada's private broadcasters to acquire production outfits. CanWest Global owns Jay Firestone's Fireworks and Seven Arts International. CTV recently joined former DreamWorks production head Robert Cooper in a new production venture, Landscape Entertainment.
Motion, the leading producer in Quebec, is active in feature films, TV drama and young adult and children's programming. Both parties describe the talks as exploratory but analysts suggest that neither side is likely to find a better fit in the Canadian market.