Canwest denies newspaper sale deal

Canwest Global Communications Corp. denied Friday a report that a deal is close to sell a number of its newspapers.

According to the Globe and Mail, National Post chief executive officer Paul Godfrey has lined up private equity funds to bid for a slew of newspapers owned by the debt-addled media conglomerate. The report cited unidentified sources. Canwest owes its lenders $3.9 billion.

But Canwest spokesman John Douglas said the papers are not for sale.

"The papers are part of the Canwest company and this story is pure speculation," he told The Canadian Press.

Godfrey himself refused to comment, saying only, "I am an employee of Canwest, and my loyalty is to Canwest," the Globe and Mail said.

Canwest controls many of the largest daily papers in Canadian cities, including the Ottawa Citizen, the Montreal Gazette, the Vancouver Sun, the Vancouver Province, the Victoria Times-Colonist and the Calgary Herald.

Godfrey has a history of similar transactions. In the 1990s, he led a $411-million buyout of what was then Toronto Sun Publishing Corp. The properties were ultimately sold to Quebecor, which paid $983 million for the titles in 1999, the Globe and Mail story noted.

Watchers applaud news

Industry watchers said the report was good news.

It's "probably the best possible scenario for Canwest that you can imagine," said Carmi Levy, an independent technology analyst based in London, Ont.

"Paul Godfrey has a track record of acquiring media properties, turning them around and selling them for a massive profit. Here's a guy who's respected in both journalistic as well as financial circles."

Gavin Graham, director of investments with BMO Asset Management in Toronto, expected Godfrey would have little difficulty finding investors. "If past performance is any guide to future performance, you'd imagine there are quite a few people who would be quite happy to do so, and to back Paul Godfrey again.

"This is going to be part of a restructuring which will see the existing company put into bankruptcy," Graham said.

Levy predicted Canwest will sell off other assets as well, and soon, in order to pay down its massive debt to creditors.

"Time is of the essence here," he said, "because at some point the economy will turn around and the assets that it continues to own will then become once again cash cows." 

The Canwest Global television properties would likely stay under Canwest's control, Levy predicted, "because those are the ones that are going to contribute most positively to their bottom line cash flow and the last thing they would want to do is get rid of them prematurely."

The Asper family of Winnipeg has already lost control of Canwest, Graham said.

"It effectively has already happened in that when the company failed to make its interest payments due within the grace period of 30 days … then effectively control passed from the people who have the share of the votes, which is the Aspers, to the people who have lent the money, which is the banks and the bondholders," he said.

The deal —if it happens— would resolve the perception that Canwest is a "big, unwieldy" media conglomerate, Graham said, and make it easier for potential buyers of the other assets. "By breaking it up into bite-sized chunks, as it were, you actually allow people to focus on one particular division and say, 'Do we like this? Is this a fair price?'

Quoting a lawyer involved in the company's restructuring, the Globe and Mail named Torstar Corp. as a likely bidder for some or all of the chain's newspaper assets.

Canwest has already sold off numerous media assets in Canada and abroad in an attempt to get its $4-billion debt load under control. Last week, the chain sold its stake in an Australian television network for $634 million.

After first missing interest payments on debts last spring, Canwest and its creditors have extended deadlines numerous times. Its latest deadline to make certain payments to lenders is Oct. 31, but the process is believed to be coming to a close, and the Asper family currently heading the chain is expected to lose control in favour of the company's many lenders.