Shaw's Canwest purchase: an end to the suffering

The Feb. 12 announcement that Shaw Communications Corp. will buy a controlling stake in Canwest Global Communications could signal the end of years of debt and downsizing for the beleaguered Winnipeg-based media firm.

Calgary-based Shaw would own at least 20 per cent of Canwest's equity and 80 per cent of its voting stock under the terms of the deal.

Canwest's newspapers, which include the National Post, the Montreal Gazette and the Ottawa Citizen and other papers in Ontario, the Prairies and the West, are not included in the transaction. They are in a separate unit, which is also under creditor protection.

The Shaw deal is contingent on the emergence of Canwest fromcreditor protection proceedings which were initiated last October. At that time, the company said it neededapproximately $45 million in Canadian equity to exit restructuring, according to media reports.

"Creditor approval of the recapitalization transaction is required by no later than April 15, 2010 and the recapitalization transaction must be completed by no later than Aug. 11, 2010," according to a statement released by the company.

It's welcome news for Canwest, which has been operating under court supervision since 2009.

If the deal goes through, Canwest will continue to operate as an independent company, with a separate board of directors. Final approval from Canwest's creditors and the CRTC would also be required.

Canwest currently owns the Global television network, one of Canada's largest newspaper chains and several specialty cable channels.

Debt timeline

Much of the last decade has been a series of gargantuan purchases and financial woes for Canwest, whose president and chief executive officer is Leonard Asper, son of founder Israel (Izzy) Asper:

• On Feb. 10, 2010, David and Gail Asper, the son and daughter of Canwest Global Communications founder Israel Asper, resign from the media conglomerate's board of directors.
• In January 2010, the company's newspaper group, Canwest LP falls behind on debt payments, prompting the Bank of Nova Scotia to step in and attempt to spearhead the sale of 45 newspapers contrary to Leonard Asper's wishes. It is announced that senior lenders are owed $935 million.
• On Jan. 11, Canwest director Frank King resigns from the company's board of directors.
• Earlier that month, the company announces it is seeking buyers for its newspaper publishing unit.
• In November 2009, the company's releases its fourth quarter and year-end results for 2009. It reports a revenue drop of eight per cent to $2.87 billion and a decrease in its operating profits before restructuring, impairment and other one-time expenses of 25 per cent to $462 million. Canwest reports a net loss of $1.69 billion, for the fiscal year ended August 31, 2009.
• In October 2009, Canwest Media Inc., Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView and Fox Sports World), the National Post and certain subsidiaries voluntarily enter into proceedings under the Companies Creditors Arrangement Act (CCAA). "This will allow us to implement an orderly financial restructuring of these business units," Asper says in a filmed statement on the company's website on Oct. 6, 2009. "It's important to understand that when the CCAA is involved, it's not bankruptcy it's creditor protection."
• That same month, the Toronto Stock Exchange announces it is delisting Canwests subordinate voting shares and non-voting shares effective at the close of market on Nov. 13, 2009.
• In March 2009, Canwest sells the New Republic, a U.S political magazine, as part of an ongoing effort to improve its balance sheet.
• In 2008, the company sells its U.K. radio stations, closes commuter newspapers in Calgary, Edmonton and Ottawa, and closes underperforming specialty channels (Cool TV, X-treme Sports).
• In its 2008 annual report, Canwest states: "We face some real challenges ahead, we must manage our costs while at the same time develop new profit and revenue streams. But at the end of the day, we're in the business of selling advertising and that is a good business to be in because, by every measure, spending by advertisers is growing steadily."
• In November 2007, Canwest announces it is cutting 560 jobs about five per cent of its workforce including 210 jobs on its broadcast side.
• In January 2007, Canwest announces a $2.3-billion takeover of Alliance Atlantis Communications Inc., one of Canada's largest entertainment companies, in partnership with private equity firm Goldman Sachs Capital Partners.

Critics say Canwest's troubles began with the monster $3.2 billion purchase of media giant Hollinger International's 13 daily newspapers, 126 community papers, the National Post and the canada.com websitein 2000.

At the time, Israel Asper, chairman of Canwest Global, is quoted as saying: "We don't intend to be one of the corpses lying beside the information highway."