Canwest

2737469 Canada Inc.
Public
(TSX-V: CGS)
(TSX-V: CGS.A)
Industry Communications
Media Services
Fate

Bankruptcy

Predecessor Canwest Global Communications Corporation
Successor Shaw Media (broadcasting) and Postmedia Network (publishing spin-off)
Founded 1974
Founder Izzy Asper
Defunct October 27, 2010 (operations)
May 27, 2013 (dissolution)
Headquarters Winnipeg, Manitoba, Canada
Area served
 Canada
Key people
 Derek H. Burney
(Chairman of the Board)
Products Broadcasting
Advertising
Revenue C$ 2.867 billion (2009)
C$ 197 million (2009)
C$ −1.689 billion (2009)
Total assets C$ 3.876 billion (1Q 2010)[1]
Total equity C$ −449 million (1Q 2010)[1]
Number of employees
 12,072 (May 2009)

Canwest Global Communications Corporation, which operated under the corporate brand Canwest, was a major Canadian media company based in Winnipeg, Manitoba, with its head offices at Canwest Place. It held radio, television broadcasting and publishing assets in several countries, primarily in Canada.

Canwest entered bankruptcy protection in late 2009, leading to the sale of the company's assets. Canwest's newspaper arm was sold to a group of creditors led by National Post CEO Paul Godfrey, through a newly formed company named Postmedia Network.[2] The sale of the company's broadcasting arm to Shaw Communications closed on October 27, 2010, after CRTC approval for the sale was announced on October 22; those assets are now collectively known as Shaw Media.[3][4]

Following the sale of assets, the company was renamed 2737469 Canada Inc., ceased to carry on business, and commenced bankruptcy proceedings under the Bankruptcy and Insolvency Act.[5] The company was finally dissolved on May 27, 2013.[6]

Operations

As of April 2009 (prior to seeking creditor protection), Canwest owned, in whole or part, a variety of Canadian media assets, including:

The company had previously sold off some of the smaller newspapers it had acquired in the Southam purchase. Canwest also previously owned broadcasting operations in Australia (as majority shareholder of Network Ten), New Zealand (through CanWest MediaWorks New Zealand), and the Republic of Ireland (as a minority shareholder of TV3).

History

Beginnings

In 1974, a group led by Israel Asper bought the assets of Pembina, North Dakota television station KCND-TV from broadcaster Gordon McLendon, moving the station to Winnipeg as independent station CKND-TV. Asper, through his company, Canwest, eventually bought out his partners in the Winnipeg station. A few months later, the Asper group joined a consortium that bought CKGN-TV, a network of six simulcasting transmitters across Ontario that carried many of CKND's programs and was known on-air as the Global Television Network. Canwest bought controlling interest in 1985, thus becoming the first western-based owner of a major Canadian broadcaster.

Canwest subsequently invested in or acquired other independent TV stations across Canada. Eventually, his station group became known as the "Canwest Global System." In 1997, Canwest bought controlling interest in CKMI-TV, the privately owned CBC affiliate in Quebec City. Canwest then set up CKMI rebroadcasters in Montreal and Sherbrooke. With this move, Canwest's stations now had enough coverage of Canada that on August 18—the day CKMI officially disaffiliated from CBC—Canwest rebranded its station group as "The Global Television Network." Throughout the 1990s, Global (and its antecedents) held Canadian rights to hit U.S. series such as Cheers, Friends, and Frasier.

Canwest also bought broadcasting assets internationally, including outlets in New Zealand, the Republic of Ireland, and Australia, although all were eventually sold off. In 1991, Canwest issued a successful initial public offering on the Toronto Stock Exchange. In June 1996, Canwest was listed on the New York Stock Exchange.[7]

Beyond broadcasting and the newspapers

Lacking a presence in Alberta, the company set its sights on Western International Communications, which owned three independent stations in that province that carried Global programming. It eventually bought that company's broadcasting assets in 2000. This not only boosted Global's coverage in western Canada, but prompted the establishment of a second over-the-air service, originally known as CH, since in some areas the combined company had duplicate over-the-air coverage through multiple stations. Later that year, Canwest announced its acquisition of the Southam newspaper chain from Conrad Black, in order to pursue a media convergence strategy.

The CanWest logo from 1997 to 2008.

Canwest was initially slow to invest in specialty channels due to the strength of its terrestrial network. In 1999, seeking to change this, the company announced a deal to buy out the Canadian partners of NetStar Communications, owner of TSN, but was stymied by U.S. partner ESPN, which had veto power over such a sale. ESPN instead came to terms with Canwest's main rival CTV, a longtime business partner of ESPN's parent company Disney, as an acceptable buyer,[8] which the selling partners eventually agreed to.

In October 2005, CanWest's Canadian newspapers were sold into an IPO trust. Sold 25.8% of Canada's newspapers for C$550 million. Attached to the Canadian newspaper IPO was $850 million in long term debt. CanWest bought back the 25.8% Newspaper Trust IPO (and debt) in November 2008, for cash considerations of $495 million.

The company was already one of the largest owners of Canadian local TV stations, when Canwest and Goldman Sachs in 2007 announced they would jointly acquire Canadian producer and broadcaster Alliance Atlantis Communications and its large stable of wide-distribution specialty channels. Under the deal, Canwest took control of the broadcasting portion of AAC, although Goldman Sachs remained a major investor in those assets. Goldman retained or resold the remaining pieces of AAC, the distribution arm soon re-emerging as Alliance Films.

Canwest executives testified in the Canadian Radio-television and Telecommunications Commission hearings over fee-for-carriage, requesting that the commission force cable and satellite companies to pay for their signals without passing the fees on to their subscribers. In his testimony, Canwest president Leonard Asper blamed the current rules for the poor financial condition of Canada's broadcast television stations, a position which has subsequently been adopted and addressed through rule changes by the CRTC and FCC.[9]

Restructuring and creditor protection

Canwest's various acquisitions took a significant financial toll. As early as 2002, most of Canwest's operating income was going to pay interest on its high-interest rate debt. By 2007, the company's bonds were downgraded to junk status.[10] By early 2009, it became clear the company's debt was not manageable in light of the global economic crisis, forcing Canwest into an extended set of negotiations with its lenders and a series of cost-cutting moves. The company's income statements reported net losses in 2008 and 2009, even though its operating activities were profitable (before taxes, interest, and non-operating charges: C$197 million in 2009, vs. C$428 million in 2008).

On August 31, 2009, Canwest shut down its secondary system E! (the former CH). Three of the former E! owned-and-operated stations – CHCH Hamilton, CHEK Victoria, and CJNT Montreal – were sold to third parties, while a fourth, CHBC Kelowna, was converted to a Global station. The remaining station, CHCA Red Deer, was closed as of the same date.[11][12]

On September 24, the company announced that it would sell its 50.1% stake in Ten Network Holdings for A$680 million,[13] in order to pay down its significant debt. The sale of CanWest's Australian media operations reduced some C$582-million in debt tied to the Australian TV network, raising the total value Canwest can erase from its overall debt to more than C$1.2-billion. Before the Ten deal, Canwest held about C$3.8-billion of debt on its balance sheet. In court documents, Goldman Sachs alleges "fraudulent" and "abusive" changes to the internal operation of Canwest in the days before it filed for creditor protection. As part of the filing, the Wall Street investment bank is seeking to undo these changes, and has also claimed that CanWest's creditors should return the C$426 million they received from Canwest balance sheet in September, after CanWest sold its stake in Ten.[14]

On October 6, the company voluntarily filed for creditor protection under the CCAA, due to C$4 billion mounting debt across radio, television broadcasting and publishing assets in several countries.[15] At the same time it announced it had agreed to a recapitalization transaction with some of its lenders, which will likely require the approval of the Canadian Radio-television and Telecommunications Commission (CRTC). When completed, bondholders – led by hedge funds West Face Capital, GoldenTree Asset Management, and Beach Point Capital Management[16] – will own a majority of shares, leaving existing shareholders, including the Asper family, with a total of 2.3% of the "new" Canwest. However, the Aspers are expected to invest a further C$15 million in the restructured entity.[17]

In January 2010, CanWest's bonds commanded about 70 cents on the dollar. CanWest's bonds at one point traded for as little as 15 cents on the dollar. Several sources say that as CanWest notes increased fivefold in price, distressed-debt funds took profits on part of their position, with Angelo Gordon among the buyers.[18]

On February 3, 2010,[19] it was reported that a group led by Golden Tree Asset Management LP complained that "it was unfairly frozen out of the auction of Canwest Limited Partnership."

As part of the transaction, Canwest and some of its subsidiaries, including Canwest Media Inc., The National Post Company, and Canwest Television LP (the licensee of Global, MovieTime, DejaView, and Fox Sports World Canada) filed for creditor protection under the Companies' Creditors Arrangements Act. Canwest Limited Partnership, a subsidiary which owns the company's other newspaper assets and online properties, is negotiating separately with creditors, and is expected to file for creditor protection at a later date. Specialty channels operated in partnership with other companies (such as TVtropolis, Mystery TV, MenTV, and the former Alliance Atlantis properties) are also not included in the present filing. Canwest shares were also suspended from trading on the TSX.

Canwest said that it was not being liquidated at this point, and the company insisted that the proceedings would make Canwest "a stronger industry competitor with a renewed financial outlook." Nevertheless, some analysts expected that the conglomerate would sell assets or be broken up entirely as the restructuring process continues, noting that the publishing division has a separate set of lenders.[16] As it turned out, the company would indeed be broken up.

Sale of assets to Shaw and Postmedia

In February 2010, the company announced an agreement with Shaw Communications whereby the latter company would buy an 80% voting interest, and 20% equity interest, in the restructured entity, pending approvals from the Canadian Radio-television and Telecommunications Commission (CRTC) and others. The company's newspapers were not part of the Shaw deal and were already sold separately to Postmedia Network.[20] However, the Asper family with Goldman and Catalyst made their own bid to retake Canwest with a $120 million bid in competition with the bid proposed by Shaw Communications.[21] On February 25, 2010, it was announced that Shaw Communications had won a court battle to continue their plans to purchase assets & voting shares from Canwest. After the announcement, Shaw revealed that its investment amounted to a minimum of $95-million in exchange for 20 per cent of the equity and an 80-per-cent voting interest in the restructured company.[22]

Although Goldman, Catalyst, and the Aspers continued to work on their own bid after the Shaw agreement, Shaw announced a revised agreement, following court ordered mediation, under which it would purchase the entirety of Canwest's broadcasting operations, including the portion owned by Goldman.[23] This deal was later modified following a second court ordered mediation to include a settlement agreement between Shaw, creditors, and the Official Ad Hoc Committee of Shareholders, led by the Aspers, Blott Asset Management, L.L.C. and two other hedge funds.[24] This marked the first successful equity committee campaign in Canada under CCAA. A modified deal, including the Settlement Agreement, received the approval of the Ontario Superior Court on June 23, 2010,[25] the Competition Bureau as of August 13, 2010,[26] and was given final approval from the CRTC on October 22, 2010, with final closing occurring in October 2011 following the official CMI Transition Order.[27] Canwest is now delisted from the TSX.[28] The company ceased operations that same date. Meanwhile, Shaw Communications reorganized Canwest into Shaw Media.

Corporate governance

Board of directors

The last members of the board of directors of the company were Derek Burney, David Drybrough, David Kerr, Leonard Asper, Izzy Asper, Lisa Pankratz, Frank McKenna, David Asper, and Gail Asper.[29] Gail Asper, David Asper, and Lisa Panktratz resigned from the board, and from all other director and officer positions within Canwest and its subsidiaries, on February 10, 2010.[30]

Concentration of power

Canwest was often cited as an example of how the ownership of Canadian media has become concentrated in the hands of a few individuals and large corporations. Canwest founder Izzy Asper was known as a strong supporter of both Canada's Liberal Party and Israel's right-wing Likud party, and of many laissez-faire policies in both countries. Observers have suggested that Asper's political views have had a significant impact on news coverage at CanWest media outlets. For example, in 2002, Ottawa Citizen publisher Russell Mills was fired by Canwest after the paper published a series of articles exposing a financial scandal involving then Prime Minister Jean Chrétien.[31]

Canwest's power in the marketplace was reflected in a contract that freelance contributors were required to sign. Until recently, standard industry practice was that freelancers sold the rights for one time use and only in Canada.

Editorial controversies

Since the 2000 acquisition of the major former Canadian newspaper holdings of Conrad Black's Hollinger International (now Sun-Times Media Group), including Canwest News Service, opposition has been expressed by some journalists, union spokespersons, politicians, and pundits about Canwest's enforcement of its corporate editorial positions. A 2001 decision to run regular uniform national editorials in all metropolitan dailies (except National Post), whereby local editorial boards could not take local positions on subjects of national editorials, ignited major national controversy and was subsequently withdrawn.

Conflict over Canwest editorial control and policy has focused in particular on three issues:

Upon acquiring Southam's Newspapers from Hollinger International, Israel Asper continued Conrad Black's policy of 'blacklisting' influential Canadian world and military affairs journalist Gwynne Dyer's internationally published articles. This antipathy was prompted by Dyer's views on conflict in the Middle East and his opposition to neoconservatism, which run contrary to the ideological views of Asper and others on Canwest's board of directors then and today. Partially as a response to this, Dyer published a collection of his articles on the Middle East and related topics called With Every Mistake in 2005.

Canwest newspapers and broadcast outlets in British Columbia were regularly criticized for giving a "free ride" to the BC Liberal government of Premier Gordon Campbell, especially in relation to the scandals and controversies ensuing from the privatization of BC Rail but also in cooperating with the government's manipulation of information for political purposes, such as the suppression of the actual scale of the deficit or welfare rates in advance of the 2009 election. Conversely, coverage of the New Democratic Party is criticized as being unfairly negative.[40][41][42] Canwest is one of the major campaign contributors to the BC Liberal party and gives regular column space to pundits from the think tank Fraser Institute (one such regular contributor being the Premier's brother, Michael).

See also

References

  1. ↑ 1.0 1.1 "CanWest Global Communications Corp. financials". Google Finance. Retrieved 2010-02-12.
  2. ↑ The Canadian Press (July 2, 2010). "Canwest newspaper chain to be called Postmedia Network, Paul Godfrey says". Toronto Star. Retrieved July 4, 2010.
  3. ↑ Shaw Communications (press release) (October 22, 2010). "SHAW ANNOUNCES ACQUISITION OF CANWEST BROADCASTING ASSETS EXPECTED TO CLOSE OCTOBER 27, 2010" (PDF). Retrieved 2010-10-23.
  4. ↑ Shaw Media website. Shawmedia.ca.
  5. ↑ "Canwest’s restructuring Plan successfully implemented", 2737469 Canada Inc. press release (via Shaw Media), 2010-10-27. Retrieved 2010-10-27.
  6. ↑ "Federal Corporation Information: 2737469 Canada Inc.". Industry Canada. March 25, 2014. Retrieved 2014-04-26.
  7. ↑ "CanWest Global Communications Corp.", New York Stock Exchange
  8. ↑ "CTV AND ESPN AGREE TO BUY CONTROL OF NETSTAR", The New York Times, February 6, 1999
  9. ↑ "'Pull your weight' Canwest tells CRTC". Marketing Magazine (Rogers Publishing). November 19, 2009. Retrieved February 16, 2010.
  10. ↑ Bourrie, Mark (February 1, 2010). "Roundup: Canadian media woes as major company undergoes failed media convergence experiment". iStockAnalyst. Retrieved February 14, 2010.
  11. ↑ "Canwest closing TV stations in Alberta, B.C.". Canadian Broadcasting Corporation, July 22, 2009.
  12. ↑ "CHCA-TV fades to black". Red Deer Advocate, Albertalocalnews.com (July 23, 2009).
  13. ↑ McFarland, Lyndal (September 24, 2009). "CanWest sells Ten Network stake for $680m". The Australian. Dow Jones Newswires. Retrieved July 9, 2011.
  14. ↑ Globe and Mail via FCB Nov 2, 2009. Friends.ca (November 2, 2009).
  15. ↑ Clark, Andrew (October 6, 2009). "Canwest Global Communications files for bankruptcy protection". The Guardian (England). Retrieved July 9, 2011.
  16. ↑ 16.0 16.1 Robertson, Grant; Willis, Andrew (September 7, 2009). "The Asper dream ends, the selloff begins". The Globe and Mail (Canada).
  17. ↑ "Canwest gets court protection from creditors". CBC News. October 6, 2009.
  18. ↑ Willis, Andrew (November 4, 2009). "Hedge fund buys CanWest bonds". The Globe and Mail. Retrieved July 9, 2011.
  19. ↑ ACTUAL ARTICLE TITLE BELONGS HERE!, Montreal Gazette
  20. ↑ "Shaw moves for Canwest control", Canadian Broadcasting Corporation, 2010-02-12
  21. ↑ Asper Re-bid. Mediaincanada.com.
  22. ↑ ACTUAL ARTICLE TITLE BELONGS HERE!. The Globe and Mail.
  23. ↑ "Torstar confirms Canwest bid: Shaw wins Goldman support to buy TV assets". CBC News. May 3, 2010. Retrieved 2010-05-10.
  24. ↑ "Asper willing to bid on Canwest TV assets". Toronto Sun. June 21, 2010.
  25. ↑ http://cfcanada.fticonsulting.com/cmi/docs/Endorsement%20re%20Motion%20to%20Approve%20Amended%20Transaction%20Documents%20and%20Authorize%20Calling%20of%20a%20Meeting.pdf
  26. ↑ Competition Bureau clears Shaw’s acquisition of Canwest. Digitalhome.ca.
  27. ↑ "Court File No. CV-09-8396-00CL – ORDER (CMI TRANSITION) date=October 21, 2011" (PDF). FTI Consulting Canada Inc. Retrieved February 4, 2013.
  28. ↑ CRTC Hearings into Shaw Takeover of Canwest Global Set to Start. Broadcaster Magazine (September 20, 2010).
  29. ↑ "Canwest Board of Directors". Retrieved 2010-10-27.
  30. ↑ "Canwest announces further changes to its Board of Directors". TMXmoney News. February 10, 2010. Retrieved February 11, 2010.
  31. ↑ "Citizen publisher fired after critical coverage of PM". CBC News. June 18, 2002.
  32. ↑ "Harper promises Toronto a place in government". CBC News. January 18, 2006. Retrieved 2009-01-23.
  33. ↑ Fisk, Robert (December 18, 2002). "Journalists are under fire for telling the truth". The Independent (London, UK).
  34. ↑ "Press for peace". The Queen's Journal (Ontario: Alma Mater Society of Queen's University). March 15, 2002. Archived from the original on September 20, 2004. Retrieved December 18, 2004.
  35. ↑ 35.0 35.1 "Canwest huffs and puffs while free speech burns". The Georgia Straight. July 17, 2008. Retrieved 2009-04-14.
  36. ↑ New York Times. The New York Times.
  37. ↑ CBC News Online staff (September 17, 2004). "Newspapers accused of misusing word 'terrorist'". Canadian Broadcasting Corporation. Archived from the original on September 19, 2004. Retrieved September 18, 2004.
  38. ↑ "Reuters upset by CanWest's misuse of 'terrorist'". Canadian Broadcasting Corporation. September 17, 2004. Archived from the original on December 8, 2004. Retrieved December 18, 2004.
  39. ↑ journalists at the Montreal Gazette (December 10, 2001). "Media Giant Silences Local Voices: Canadian Journalism Under Attack". Gazette Newsroom (Federation Professionnelle Des Journalistes du Quebec). Archived from the original on February 13, 2002. Retrieved December 18, 2004.
  40. ↑ The Legislature Raids blog. Retrieved August 2, 2009.
  41. ↑ Bill Tieleman (blog). Retrieved August 2, 2009.
  42. ↑ "Is Gordon Campbell a 'made man'?", Republic of East Vancouver. Retrieved August 2, 2009.

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