Is there a future for Canadian TV?

By Jason Kirby - Monday, October 19, 2009 at 11:20 AM - 18 Comments

In late August, employees at CHEK-TV in Victoria gathered in the parking lot for one last goodbye. After 53 years on the air, Canwest Global Communications was about to pull the plug on the money-losing television station in a desperate and ultimately futile attempt to stave off collapse. Then, with just hours to go before the final fade to black, general manager John Pollard announced a last-minute reprieve. He’d reached an agreement with Canwest CEO Leonard Asper that would see the station’s 40 employees, along with a handful of Vancouver Island residents, buy CHEK and run it themselves. But if Pollard, now a media proprietor in his own right, is at all nervous about betting his life savings on an industry that just saw one of corporate Canada’s most spectacular flame-outs, he’s not showing it. “We get to call the shots now,” he says. “We’re going to make this work.”

The daring experiment at CHEK is just one example of the way the media landscape is being forever altered. A perfect storm of the recession, new technologies and shifting tastes has threatened the way conventional broadcasters like Canwest, CTV and the CBC have operated for decades. Now, with Canwest’s move to put itself into bankruptcy protection, a wave of speculation has been unleashed about who will buy the Global Television network. More importantly, questions are being asked about how those stations can once again be made viable. Continue…

Canwest’s quiet coup

By Colin Campbell - Monday, August 10, 2009 at 2:08 PM - 5 Comments

It’s the company that just won’t die. After teetering on the edge of bankruptcy for months, Canwest won another extension from its major bondholders last week, preserving the debt-laden company in a state of limbo until at least Aug. 14. Insiders tell Maclean’s that a resolution is getting close, however, and despite the outward calm, intense negotiations are progressing that will see Canwest changed forever.

For the last few months, what was once one of Canada’s largest and most influential media companies has been at the mercy of bondholders who are owed more than $760 million. Sources familiar with the negotiations confirm that the key players include two U.S. hedge funds—GoldenTree Asset Management and Beach Point Capital Management—and one Canadian firm, West Face Capital, names first reported in the Globe and Mail. Since Canwest has missed several interest payments, this small cadre of bondholders could pull the plug and demand full payment at any time—which would almost surely force Canwest into bankruptcy. So far they’ve resisted, instead granting nearly a dozen extensions. Continue…

Family ties

By Jonathon Gatehouse - Saturday, March 21, 2009 at 1:28 AM - 17 Comments

A potential federal bailout for private television broadcasters is about to come under scrutiny before a parliamentary committee. Starting March 25, the House of Commons standing committee on Canadian heritage will launch a series of hearings into the television industry’s current economic crisis. But the opposition is serving notice that it intends to find out why the Harper government seems intent on helping private companies like CTV and Canwest Global, while leaving the publicly-owned CBC to fend for itself.

“We want to make sure that (Heritage Minister) James Moore isn’t making a sweetheart deal with a bunch of lobbyists who are close to the Prime Minister,” says Charlie Angus, the NDP’s heritage critic. Earlier this week, the Canadian Press reported that Stephen Harper has recently met with both Canwest CEO Leonard Asper, and Pierre-Karl Peladeau, head of Quebecor, owners of the French language TVA network, to discuss the broadcasters’ concerns. Moore has indicated that the government is looking at regulatory changes and tax breaks to aid the networks—most specifically Canwest which is teetering on the edge of bankruptcy—but says no specific commitments have been made.

Witness lists for the hearings are still being drawn up, but the first to be heard from will be Konrad von Finckenstein, chair of the Canadian Radio-television Telecommunications Commission (CRTC.) Private broadcasters have long been after the CRTC to treat their conventional channels more like specialty networks, which receive a share of cable subscribers’ monthly bills known as carriage fees. Cable providers like Rogers, which owns Maclean’s, are opposed to the idea, claiming the system could inflate customers’ bills by as much as $10 a month.

One opposition concern is the close relationship between Canwest’s owners, the Asper family, and the ruling Conservative Party. The media company’s newspapers have endorsed Harper in the past two federal elections, reflecting a shift in the family’s political allegiances. Izzy Asper, the company’s late founder was a former leader of the Manitoba Liberal Party and a lifelong Grit partisan. In 2003, the year he died, the company donated almost $54,000 to the Liberals, more than double the $25,000 it gave the then Canadian Reform Conservative Alliance. But Asper’s children—Len, David, and Gail—have broken with the faith. Especially since dithering by former Liberal Finance minister Ralph Goodale on tax changes for income trusts shaved an estimated $150 million off the value of a 2005 Canwest newspaper trust offering. In 2007, for example, Len, David, and Ruth, their mother, all donated $1,000 each to the Tories, close to the new maximum. So did Gail, although she also gave $500 to the Green Party and $1,100 to the Liberals.

And since Stephen Harper took power in Jan 2006, his government has been supportive of some of the Aspers other endeavours. The Tories not only carried through with Liberal pledges to fund Izzy’s dream of a Canadian Museum of Human Rights in Winnipeg, but substantially upped the ante. In addition to $100 million towards construction costs, Ottawa has designated the project a “national museum”—the first-ever outside the National Capital Region—and pledged a further $21.7 million a year in operating funds, in perpetuity. (The Asper Family Foundation have pledged $20 million to the project—the third $4 million installment is due later this month—and Gail has been instrumental in raising a further $85 million for public and corporate donors.)

This past December, Treasury Board Minister Vic Toews, indicated that Ottawa is ready to give a further $15 million to another family obsession—a new stadium for the Winnipeg Blue Bombers. Under the proposed plan, the private sector will pony up $100 million of the $150 million estimated cost of the new 30,000 seat facility at the University of Manitoba. And David will take control of the now civically-owned franchise.

Another hot topic at the hearings will be the lack of government interest in bailing out the CBC. The sudden drop off in advertising has left the public broadcaster with a $100 million hole in its budget. But its pleas for an advance on next year’s funding, or other financial assistance, have been greeted with a collective Tory shrug. The NDP’s Angus questions why James Moore seems so willing to help one part of the industry, and so disinterested in the plight of another. “He’s basically hanging the CBC out to dry, going as far as to ridicule its request for bridge financing,” he charges.

But the bottom line for opposition parties will be getting the government and networks to live up to existing commitments regarding local broadcasting and Canadian content. And there they might find at least some common ground. Indeed the sudden Conservative interest in a bailout has followed on the heels of CTV’s announcement that it will close three underperforming stations—two in Ontario and one in Manitoba. And similar noises from Canwest that the same fate awaits its 5 E! channels unless a buyer can quickly be found. Coupled with the networks cuts to local newscasts, the trend bodes ill for the Tories’ favoured strategy of going “over the head” of the press gallery in Ottawa, and flogging its policies through interviews with local media.

“It wasn’t local broadcasting or Canadian content that brought us into this mess,” says Angus. “And things shouldn’t be balanced on its back.”

—with Philippe Gohier

Canwest steps closer to the brink

By Duncan Hood - Thursday, January 15, 2009 at 12:56 PM - 3 Comments

Canwest took another step closer to the brink yesterday. At the company’s annual general meeting in Toronto on Wednesday, CEO Leonard Asper announced not only weaker than expected results for the first quarter of its 2009 fiscal year, but even more worrying, that Canwest may be forced to breach a covenant on its debt.

Asper said his company had been blindsided by a sudden drop in advertising revenue resulting in a $33-million loss in the company’s first quarter, compared to a $41-million profit in the same quarter last year. “We have no certainty that we have hit bottom,” he told investors, “I don’t think anyone in this room feels comfortable saying that. It’s hard to say it’s getting worse, but it’s certainly not getting better.”

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Could Canwest go bankrupt?

By Duncan Hood - Monday, December 22, 2008 at 9:00 AM - 43 Comments

Next year will mark the 10th anniversary of Leonard Asper’s ascent to the top job at Canwest Global Communications, taking over the reins from his late father Izzy. But there might not be much of a celebration. It hasn’t been an easy ride. When the youngest Asper became president and CEO in 1999, Canwest was trading at close to $20 a share. As of early this week, it was treading water around 60 cents. What was once arguably Canada’s leading media company was kicked off the country’s main market index in September, and is now a struggling penny stock.

Asper himself seems more perplexed than anyone by his company’s rapid decline. After all, as he’s fond of pointing out, Canwest is not only making money, it’s making more money every year. Revenues have increased from $2.7 billion in fiscal 2006, to $2.9 billion in 2007, to $3.1 billion in 2008. Similarly, Canwest’s EBITDA (earnings before interest, taxes, depreciation and amortization)—a popular indicator of a company’s profitability—looks healthy. As of August, the end of Canwest’s latest fiscal year, its EBITDA hit a three-year high of $578 million—$91 million higher than the year before. Canwest’s various holdings, which include Global Television, Network Ten in Australia, various websites and 10 major daily newspapers (including the National Post), are as a whole still making money. And analysts say that from a strategic standpoint, the company’s decision to acquire Alliance Atlantis and its portfolio of top specialty TV channels last year made perfect sense.

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