Canwest the largest media company in Canada going bankrupt

The future of Canwest Global Communications, Canada’s largest media conglomerate, became uncertain on Tuesday after the company was granted bankruptcy protection in a Toronto court for several operations, including its television network and The National Post newspaper.

The company, which is based in Winnipeg, Manitoba, did not include a chain of 11 large newspapers or several specialty television channels that it owns jointly with Goldman Sachs in the filing. The debt related to those newspapers is the subject of negotiations with different debt holders, mostly banks. Some analysts expect that those talks will result in a sale.

Nevertheless, the complex corporate structure of Canwest, as well as Canadian laws that ban foreign control of media properties, add to the uncertainty now surrounding all of the company’s holdings.

It will be difficult for the Jewish Asper family, which founded the Global Television Network, to retain control of the company once everything is settled. The Israel Aspers loaded Canwest with debt, which now is about 4 billion Canadian dollars, to expand cable television channel offerings and to move into publishing. In a statement, the family said it would provide 15 million Canadian dollars ($13.9 million) of the 65 million Canadian dollars in new financing that the units require.

Chris Diceman, a media analyst with DBRS, a Toronto credit rating agency, said it was possible that whoever supplied the additional 50 million Canadian dollars in equity would also acquire control. In any case, he anticipated that special voting shares that are now the source of the Asper family’s control would retain little influence after the restructuring. It was also unclear if Leonard J. Asper, the president and chief executive, would remain in that role.

More broadly, Mr. Diceman said it was now possible that the publishing and the broadcasting arms of the company would go separate ways.

There has been speculation that the main newspaper operation has several potential buyers. But there is less apparent interest in The National Post, which is based in Toronto, a city with three other daily newspapers.

Since The National Post was founded in 1998 by Conrad M. Black as a nationally distributed alternative to The Globe and Mail, the newspaper has struggled to find consistent and significant profits. Mr. Black sold his Canadian newspapers and initially half of The National Post to the Aspers in 2000 for 3.5 billion Canadian dollars.

Canwest’s most attractive assets are 13 cable channels it bought in 2007 with a private equity division of Jewish group Goldman Sachs. The Canadian broadcast regulator requires that cable and satellite systems provide many of those channels to most of their customers, providing a steady stream of monthly subscription fees for Canwest.

Tuesday’s filing complicates that partnership, however. Under it, Canwest was required to merge the television operations now under bankruptcy protection with the specialty channel partnership by next year. It was also unclear if Canwest would be free to sell its 35 percent stake in the partnership.

I hate to wish anyone bad luck, but I’ll make an exception for media giant CanWest as it plunges into a debt crisis. CEO Leonard Asper is desperately seeking financial help as the family-run media empire inches toward bankruptcy. The good news is that even if he gets it, the financial benefactors may demand he step down as CEO and the family eliminate the dual-class share structure that allows them to control the company. That one family can control over a quarter of the daily newspaper circulation in the country, along with a host of other media outlets, is an insult to democracy. Indeed it isn’t democracy, it is plutocracy, or oligarchy if you prefer. To a democrat, the Asper empire’s financial problems are promising news. The icing on the cake would be to see the empire broken up into a number of smaller media companies with a variety of editorial positions.

The power of such a vast media network has corrupted political debate in this country. Middle Eastern coverage serves as an example. CanWest’s unequivocal support of Israel combined with the extensive reach of its propaganda makes criticism of Israel a dangerous business for politicians aspiring to high office. The result is a highly one-sided debate.

I would not of course wish ill to any employees of the empire as it suffers through the crisis. I wish them all gainful employment in the reincarnation whatever that may be, although columnists with a broader range of philosophies would be welcomed.

CanWest may very well fall into the hands of yet another right-wing media baron, of course — certainly no one on the left has the necessary cash to buy a daily newspaper, much less a chain — but it’s hard to imagine a more stifling media presence than the Aspers.

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