On Tuesday, Canada's largest media empire took its first step toward a historic breakup, as debt-laden CanWest Global Communications Corp. sought court protection from creditors to shelter some of its most crucial assets.
It was a move the company's chief executive officer, Leonard Asper, tried desperately to avoid over the past year, agonizing in private that the business founded by his late father, Izzy Asper, 35 years ago would be forever tainted by the stigma of a filing aimed at staving off bankruptcy.
The restructuring, which includes the National Post newspaper and the Global Television network, will now lead to what would be the biggest sale of media assets the country has ever seen, including the potential selloff of a national newspaper chain and the auction of a major television network.
How will CanWest's restructuring change the Canadian media landscape?
Christopher Waddell, associate professor and director of the Carleton school of Journalism and Communication, took reader questions in a live discussion. Thank you to everyone who participated.
Professor Waddell is the first occupant of the school's Carty Chair in Business and Financial Journalism, the first chair of its kind in Canada.
His career highlights include serving as CBC Television's parliamentary bureau chief in Ottawa, and various positions at The Globe and Mail, including ROB reporter, Ottawa bureau chief and national editor. In his journalism career, he has won two National Newspaper Awards for business reporting, and programs he supervised at CBC Television won six Gemini awards for television excellence.
Questions and answers
Claire Neary, Reportonbusiness.com: Chris, some of our readers have been posting their thoughts in our comments area, and many have touched on the general decline in advertising many newspapers and media organizations have faced over the past year. How much of an effect do you think this had on CanWest's bankruptcy protection filing and how do you think it may affect the company's restructuring?
Christopher Waddell: Certainly everyone in the media world has seen advertising income fall sharply with the recession but this isn't the first recession we have had and it won't be the last. Ads revenue will recover as the economy regains steam. The problem this time is that no one knows how much of the television audience and newspaper readership will leave for the Internet so it is difficult to know how advertising will be priced in the future as it is based on audience levels. It is equally hard to predict how much and if media companies will be able to make money on the Internet as they can't at the moment. In the short term the recession didn't help CanWest but it's is also true when you are so heavily in debt you have little flexibility to respond to new or unexpected developments.
Jay: What will CanWest's bankruptcy mean for The Canadian Press, Canada's national wire service. Could new owners start taking more of their product?
Christopher Waddell: That's a very interesting question. CanWest pulled out of Canadian Press several years ago and it has hurt CanWest badly as it misses some news in Canada and has no access to Associated Press material from the US, as AP has an exchange agreement with CP. There were already rumours that CanWest was going to do an election-only deal with CP to get access to its copy if we had had a federal election this fall. I would suspect the two separate companies that will likely emerge from this - a broadcaster and a newspaper company may each have an interest in striking arrangements with Canadian Press if for no other reason than to provide copy for their web sites.
Sean: Any chance this will lead to the individual newspapers being sold off to different owners?
Christopher Waddell: Yes I think that is possible but only as a second stage. The most likely scenario at the moment would be to combine the National Post with the other newspapers in a newspaper group that would then be either sold to a group of private investors or listed on the market through an IPO. One scenario could be that the new newspaper group owners decide they want to keep the National Post, Montreal Gazette, Ottawa Citizen, Edmonton Journal, Calgary Herald and Vancouver Sun giving the company a presence in almost all the major English-language markets. In such a world, the Windsor Star, Saskatoon Star-Phoenix, Regina Leader-Post and maybe even the Vancouver Province could be seen as expendable and sold to raise money to reduce newspaper group debts.
Claire Neary, Reportinbusiness.com: A couple of readers have asked about the fate of the National Post and how that fate could affect other Canadian newspapers like The Globe and Mail. What are your thoughts?