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With advertising down at its newspapers and contributions from its Australian television holdings fading, TD Newcrest says CanWest Global Communications Inc.'s shares aren't worth the risk.

“Given that the equity value has been virtually wiped out and considering the poor visibility of the future value of the company ... we have reached a point where the risk/reward does not work for us,” analyst Michael Elkins wrote in a note to clients Monday.

Mr. Elkins cut his rating to “reduce” from “speculative buy,” and dropped his 12-month price target to $1 from $3.50. Eleven analysts follow the shares, according to Bloomberg, with an average 12-month price target of $2.16.

Ten Network Holdings Ltd., an Australian broadcaster that is 56 per cent owned by CanWest, has seen its share price slump by 51 per cent so far this year as a weakening economy hits advertising revenues. Coupled with a weakening Australian dollar, the company's contribution to CanWest's net asset value has fallen to $525-million, compared to $1.14-billion.

Further clouding the company's future is a deal with Goldman Sachs, which will see the two companies share an ownership stake in a business unit built around CanWest's specialty stations. Each company's stake will vary depending on how the unit performs, and Goldman can force CanWest to buy its stake at a guaranteed minimum price.

“We expect the fundamental environment for CanWest to be very challenging for the foreseeable future,” Mr. Elkins said. “Conventional television remains under secular pressure in our view as do major market daily newspapers. We doubt that online products can grow fast enough or large enough to offset expected declines in the legacy businesses.”

Despite the problems, Mr. Elkin said the company should “continue as a going concern,” since it doesn't have any of its $3.7-billion debt about to mature. With large amounts due in 2012, however, Mr. Elkins said the company will have little financial flexibility in the coming years.

“Further down the road, we worry about the [capital expenditures] necessary to replace facility for the publishing business and/or large severance payments to close them if outsourcing becomes the only viable option,” he said.