Creditors have killed convergence at CanWest Global Communications, as the media company's television and newspaper assets will likely be sold separately as the company moves to satisfy its lenders.
CanWest moved Tuesday to put its parent company under creditor protection, effectively ending the Asper family's three-decade drive to build a media conglomerate, with holdings across print, TV and digital media.
Lenders now formally control the company's television assets and the National Post newspaper. These creditors are led by owners of CanWest's bonds.
The newspaper division, known as CanWest LP, is in the midst of its own recapitalization talks, with a different set of lenders, led by Bank of Nova Scotia. While these negotiations are ongoing, sources say CanWest LP will also likely need to file for creditor protection to complete its restructuring in coming months.
But at the end of the day, two distinct groups of lenders will end up as the new owners of CanWest's major assets. And since these creditors have little interest in operating a media company for the long term, they are expected to put television stations and newspapers on the auction block.
CanWest LP may start this process by announcing what's known as a stalking horse bid for its stable of papers at the same time it files for creditor protection, sources say, to put a floor price on its assets. Nortel Networks used the same approach when it began to sell off divisions after filing for creditor protection earlier this year.
In an e-mail to employees at the publishing division on Tuesday, CanWest executive Dennis Skulsky said ownership of the National Post could be moved into CanWest LP as part of the restructuring process. Sources say that on the right terms, the newspaper division could be more attractive to a potential buyer if it includes the National Post's presence in Toronto.
Several of the parent company's TV holdings are caught up in Tuesday's creditor filing, including at the national network - Global - and three specialty channels: MovieTime, DejaView and Fox Sports World.
CanWest co-owns a stake in 15 other specialty television channels, a division that is a partnership with the private equity arm of Goldman Sachs. This division has not filed for creditor protection, but is expected to eventually change hands.
Potential buyers of CanWest's specialty television stakes would include all of the company's domestic rivals, a list that ropes in Astral Media Inc., Corus Entertainment Inc., Rogers Communications Inc. and CTVglobemedia. For regulatory or financial reasons, most of these rivals would not bid on Global television.
Bidders for the newspapers - 11 daily newspapers across the country - are expected to include a management group, with potential interest in specific newspapers from regional publishers. For example, Torstar Corp. would likely look at CanWest LP's two Ontario papers, the Ottawa Citizen and Windsor Star, as they complement its existing stable of papers in Southern Ontario. Debt-heavy Torstar is seen as unlikely to bid for the entire CanWest LP chain.