Goldman Sachs: “We are not television operators, nor do we wish to be”

As expected, Canadian control was a central issue at today's CRTC hearings into CanWest MediaWorks Inc.'s proposed acquisition of Alliance Atlantis Communications Inc., which is being heavily financed by investment bank Goldman Sachs Capital Partners - an affiliate of US firm Goldman, Sachs & Co.. Knowing foreign ownership was on many minds, including those of the commissioners, CanWest's panel addressed the issue early in its opening remarks to the commission. "I want to assure you that Goldman Sachs does not wish to control any Alliance Atlantis or CanWest broadcasting entity," Goldman Sachs managing director Gerry Cardinale told the commissioners at the Gatineau hearing. "This transaction is designed so that CanWest is in control....We are not television operators, nor do we wish to be." Rather, Cardinale explained that Goldman Sachs sees itself as a financial backer only, which he said is consistent with the company's overall investment philosophy. He added that since 1986 the company has invested $23 billion of equity in companies from a wide range of industries, and that media companies currently represent less than 8% of Goldman Sachs overall investment portfolio. On the CanWest side, senior VP of programming Barb Williams underscored the three key reasons for the Alliance acquisition. First, it will expose shows that have mass audience potential, but have lacked wide access, to bigger audiences. Second, it will combine expertise from two of the country's most venerable broadcasters. And third, it will strengthen CanWest's position with foreign program distribution partners. "Frankly, it allows us to get the greatest impact possible out of the hundreds of millions of dollars spent on Canadian programming each year," said Williams. "And at its very core, enhances our capacity to continue to meet the important cultural and public policy objectives of the Broadcasting Act." As an example of how original programming on Alliance's 13 networks will benefit from the marketing power of CanWest, should the transaction be approved, CanWest's senior VP of marketing Walter Levitt pointed to the drama Billable Hours, which launched on Alliance's Showcase last year. He said the show is not yet the hit it deserves to be largely because it doesn't have the promotional strength it needs to draw larger audiences. Under CanWest ownership, however, Billable Hours would be promoted on Global and E!, would receive coverage on Entertainment Tonight Canada, and would be advertised in CanWest's national newspapers and on CanWest websites. Based on conservative estimates, Levitt said the show's marketing value on CanWest would represent about $5 million, as opposed to the $1.5 million promotional campaign it currently receives under Alliance ownership. "As a marketer, when I think about the combined impact of the Alliance Atlantis and CanWest assets, I see tremendous upside for the promotion of Canadian programming," said Levitt. "There is no doubt in my mind that CanWest is uniquely positioned as the best and most logical buyer of these 13 networks." Of course, there is much doubt in many other minds whether CanWest is the most logical buyer of Alliance if it needs foreign help to do so. Last Friday the Council of Canadians and the Campaign for Democratic Media issued a joint media release deriding the proposed acquisition. "There appears to be no real benefit to Canadians from the proposed deal," says Steve Anderson, coordinator of the Campaign for Democratic Media. "We need a Canadian-owned system that is committed to providing news and other programming that reflects the diversity of our population. Wall Street is not likely to help us get there."The Council of Canadians is on the agenda as the first of five interveners to appear before the commission following CanWest's presentation. The Communications, Energy and Paperworkers Union of Canada, which organized a rally this morning outside of the building where the hearing is taking place, is set to be intervener number four. "CanWest has been gutting newsrooms across the country, feeding its unfettered desire for acquisitions, and now it is putting the critical issue of Canadian ownership of our media on the table," said Peter Murdoch, the CEP's VP of media, in a press release issue this morning. "The result is loss of jobs, loss of local programming, loss of Canadian culture and identity."Indeed, we can expect the rhetoric from these organizations to be vastly different than that of CanWest.

Goldman Sachs: “We are not television operators, nor do we wish to be”

Broadcast | November 19, 2007

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