The move comes as the company struggles to refinance its mounting debt. It recently sold off the “E” channel, to ChannelZero. There were some discussions earlier this year of a possible bailout, but they were unsuccessful. GlobalTV is the company’s flagship station operating out of Toronto Ontario, with affiliates across the country. When Canwest bought the Hollinger newspaper chain the company assumed its debt. The economic downturn, and the recent technological advancements have hit the industry hard. Canwest’s debt is estimated to be approximately $4 billion.
Canwest Specialty Channels To File for Creditor Protection
Besides the company operating the National Post, and GlobalTV, Canwest’s specialty channels Dejaview, and Fox SportsWorld will also file for creditor protection.
The filing falls under The Company’s Creditors Arrangement Act. It’s a piece of federal legislation allowing businesses to continue operation while restructuring their assets. The act also protects company assets from seizure by creditors while the restructuring process is ongoing. According to a news release quoted by CBC.CA, claiming creditor protection “represented the best alternative for the long-term interests of its approximately 1700 employees, customers, and stakeholders.”
It’s important to note, that accept for the National Post no other newspaper is affected. Under the complex ownership structure Canwest newspapers are owned by Canwest Limited Partnership (Canwest LP). They include The Montreal Gazette, Ottawa Citizen, Calgary Herald, and Vancouver Province. The newspaper division hasn’t filed for creditor protection yet, but may do so before the interest payment deadline of October 31st.
Canwest Sells Off Network Ten, “E”- Are Newspapers next?
Canwest sold off its Australian station Network Ten, and “E” Network. Network 10, was sold within the last month for $630 million, the proceeds going to help pay off the debt. The “E” Channel out of Hamilton Ontario reverts to its CHCH roots and becomes an all-news/movies station. The price paid for CH was undisclosed.
The company’s decision to seek creditor protection hasn’t caught union leaders by surprise. In remarks published by Reuters Arnold Amber, Director of the Communications Workers of America, a union representing employees in Canwest’s newspaper division said he wasn’t shocked: “This company has basically been in trouble this entire year.”
Rumors persist Canwest will sell off its newspaper division despite statements to the contrary. Reports say National Post Chief Executive Officer (CEO) Paul Godfrey had the support of private-equity investors and was going to buyout Canwest LP.
Canwest originally bought the Hollinger Newspaper chain from media mogul Conrad Black in 2000, and as part of that deal assumed a portion of that company’s debt. Reports have been circulating since April when the company faced a series of financial deadlines, including one to make a deal with senior creditors (April 7th, 2009), and come up with $30.4 million in interest payments (April 14th 2009).
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