Canwest’s specialty channels, broadcast properties for sale – for the right price, say analysts

Although Canwest’s creditors have put only the company’s newspapers up for sale, analysts say its broadcast and specialty channels are probably available—for the right price. They say Canwest’s specialty channels are its prized assets, and that Global TV, while successful, represents traditional media, and may have a harder time finding a buyer. “The buyers are primarily looking at the specialty channels. There will be buyers for the broadcast , at a lower price. Crucially, the two do not need to be tied together. There are very few synergies between having an over-the-air broadcast network and a specialty network,” Duncan Stewart, director of technology, media and telecommunications research at business advisory firm Deloitte Canada, said in an interview. Canwest’s bankruptcy protection filing does not affect the company’s specialty channels, but potential buyers are eyeing the company’s broadcast and television assets. “They’re all effectively up for sale,” Stewart said, adding that Canwest may be facing a broader sale to get its books in order. “At the right price, any one of them can be sold.” Since Oct. 6, Winnipeg-based Canwest Media Inc. has been under creditor protection as it seeks recapitalization. Canwest Media owns the Global Television network and specialty channels such as Tvtropolis, Mystery TV, Men TV, Slice and HGTV Canada. The company also has equity interests in stations run by other companies – Dusk, and Historia, for instance – and it owns 11 daily newspapers across Canada, including the National Post, Edmonton Journal, and Windsor Star. But Canwest’s specialty channels are “the cherries to pick,” said Alan Sawyer, head of Two Solitudes, a digital-media and broadcast industry consultancy. Although the channels aren’t for sale, potential buyers are expressing interest. Shaw Communications Inc. and Corus Entertainment Corp. have expressed interest in Canwest’s assets—but not its newspapers. This month, Jim Shaw, CEO of Shaw, told analysts that he met with Canwest’s owners to discuss buying some of Canwest’s assets. Shaw didn’t say which properties, but noted that its newspapers “were not even in discussion.” "I'd call it exploring right now. There's no deal or anything," Shaw said. Corus CEO John Cassaday has said he would be interested in Canwest’s specialty channels. Canwest was caught by the industry-wide advertising downturn last year, and nearly all of its properties took hits. But the specialty channels fared much better than the company’s traditional broadcast entity, Global TV. “Give me a dual stream—subscription plus advertising—and I’m all over it,” Stewart said. “You can see that if you break out the Canwest results. The specialty business is still churning out absolutely delightful levels of EBITDA. It’s affected by the recession, but it isn’t affected much. Contrast that with the network side; it’s just a completely different story.” Stewart said he wonders whether there are any buyers interested in Global. “The whole advertiser-supported model is slightly more fun than peeling off your own skin, but not by much,” he said, explaining that advertisers are moving away from television, favouring less-expensive and easier-to-track web-based campaigns. Canwest owns more than 50 websites. Once considered a leader in the drive to create cross-media synergies, the company is now running its newspapers, websites, and TV stations under creditor protection, looking to reformat its business. All of Canwest’s websites won’t necessarily face the same fate. Sites associated with the newspapers would sell with the newspapers, and sites linked to the TV stations—if they are put on the market—would sell with the stations. Stewart said there’s an “ongoing debate” about whether websites need to be tied to traditional media properties to thrive. While some online properties succeed on their own, it wouldn’t make sense to orphan sites associated with TV stations if the web and broadcast entities bolster one other, Stewart said. “If you want to sell some sort of video content, linking it to a TV network seems like a non-stupid way of doing it,” he said. A consortium led by former Liberal Senator Jerry Grafstein is reportedly looking to acquire the Ottawa Citizen, Montreal Gazette, and National Post newspapers. Sawyer suggested that the new owners of Canwest’s newspapers--whoever they might be—wouldn’t have to make many changes to Canwest’s websites. He pointed out that Canwest spent the last two years revamping its new media properties, investing in content and user friendliness for an optimized consumer experience. But the company’s broadcast entities could use a social-media boost, said one TV anchor, who requested anonymity. “Radio and newspapers are far ahead in terms of communicating by Twitter and Facebook,” the broadcaster said. Canwest’s broadcast properties may also be of interest to buyers who want to use traditional stations to solidify their positions as industry players. “They (traditional stations) can be useful in this transition, but not as a long-term strategic investment,” Sawyer said. “The last decade was a time of acquisition. It seemed to be the way to go,” the TV news anchor added. Canwest’s current situation, given its debt and creditor protection, brings the consolidation strategy into question. Canwest may have spread its resources too thinly over too many properties, he said. The TV anchor added that there is still hope for traditional television broadcasting. He pointed to the apparent success of Channel Zero Inc.’s acquisition of CHCH, formerly Canwest’s Hamilton, Ont., station. “In the right hands, smaller over-the-air broadcasters can do OK,” he said. But Stewart said he remains skeptical. Channel Zero is privately owned and doesn’t provide financial reports, so it’s difficult to evaluate its performance, he noted. He added: “it’s a weird market. CH really benefits by being in a metropolitan area that’s close to five million people.... Even if the Channel Zero model works, can you replicate it in Vancouver ... Montreal, Ottawa?” Canwest was not available for comment Monday afternoon.

Canwest’s specialty channels, broadcast properties for sale – for the right price, say analysts

Broadcast | January 25, 2010

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