Canwest's financial woes claim CHEK-TV

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      Canwest Global Communications Corp. has announced that it will shut down Victoria-based CHEK-TV on August 31. Staff received layoff notices on July 22, according to a story on the station's Web site.

      CHEK-TV was founded in 1956 and was originally headed by David Armstrong, who operated CKDA radio. Canwest continues to operate a Global TV station in Burnaby as well as the Global TV network.

      In a July 22 news release, Canwest Broadcasting president Peter Viner also announced the closure of CHCA-TV in Red Deer on August 31. Viner noted that the company's Kelowna station, CHBC-TV, would be rebranded as a Global affiliate on September 1.

      Last month, Canwest announced the sale of two other stations, CHCH-TV in Hamilton and CJNT-TV in Montreal, to a subsidiary of Channel Zero Inc., pending approval by the Canadian Radio-television and Telecommunications Commission.

      Canwest's announcement comes as the Winnipeg-based corporation struggles to deal with a $3.7-billion debt. On July 22, the company's share price rose from 11 to 17 cents on the Toronto Stock Exchange.

      The company is controlled by the Asper family. The president and CEO, Leonard Asper, is the son of deceased company founder Izzy Asper.

      Canwest's fate could be in the hands of five different financial houses, none of which have any direct experience publishing newspapers or producing television programming. Earlier this year CIBC and CIT Group put up $75 million to keep the company operating. CIT Group is a New York–based holding company with $60 billion in financing and leasing assets.

      In May, the Globe and Mail's Andrew Willis noted in a blog posting that three creditors—GoldenTree Asset Management, Beach Point Capital Management, and West Face Capital—put up $100 million to help Canwest satisfy creditors and continue operating. This occurred after Canwest failed to make a payment on Canwest Media's US$761-million debt to holders of senior subordinated notes.

      Canwest has announced that it must complete a recapitalization agreement with an ad hoc committee of these note holders by July 31. If it fails to do this, it could be forced into bankruptcy protection, at which point company assets could be sold off to pay creditors.

      Meanwhile, Canwest's publishing subsidiary—which owns the Vancouver Sun, Province, Vancouver Courier, North Shore News, and many other community and daily newspapers—is not in compliance with its financial covenants, either. The recent financial statements show that $874.2 million was due under the senior secured credit facility as of May 31, 2009.

      As a result of a default, counterparties terminated hedging arrangements with this subsidiary, Canwest Limited Partnership, and demanded $69 million, the company reported. “Canwest Limited Partnership has not satisfied this demand and does not have adequate liquidity to satisfy this or any other such demand,” it stated on July 9.

      According to the company's most recent “management discussion and analysis” document, “circulation volume” was down seven percent nationwide in the last quarter ending May 31 compared to the same quarter a year ago.

      Comments

      7 Comments

      JSmith

      Jul 22, 2009 at 5:55pm

      The beginning of the end of the right-wing CanWest empire.

      Let's cross our fingers.

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      Tom Hawthorn

      Jul 22, 2009 at 7:25pm

      Closing CHEK doesn't hurt CanWest so much as the working men and women who have been at that station, the majority of them since before they had the misfortune of working under the current ownership.

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      monty

      Jul 22, 2009 at 7:58pm

      When the Vancouver Sun published a column out of the Washington Post last week, supposedly written by that vacuous hottie, Sarah, it seemed the end must be near. Given that Ms. Alaska was almost incoherent in her press conference one wonders who actually wrote the column for her. How much farther to the right will the Sun lean before they topple off the edge of the earth?
      monty

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      Mitch

      Jul 22, 2009 at 8:01pm

      In the haste to bury the "empire", everyone seems to forget there are thousands of employees with families and debts whose lives depend on having these jobs. I am one of them and have no wish to join the burgeoning welfare lines in this country.

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      Jobs are valuable

      Jul 22, 2009 at 10:28pm

      I agree with Mitch. We cannot afford to lose another news source in Canada. Clearly Canwest is corrupt but Instead of cheering it's demise we should be fighting for journalistic integrity. Consider that Fox news could replace it and how much worse things could be... (Rush Limbaugh, etc)

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      JSmith

      Jul 23, 2009 at 10:43am

      For the non-celebrity employees of CHEK I do feel sympathy. Perhaps the station could be turned into some sort of community effort.

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      Salty

      Jul 26, 2009 at 9:45pm

      At the end of the day it's all about the dollars. Nothing more. Not families, not jobs not maintaining journalistic integrity. No one of influence cared about that stuff, least of all the Aspers. My guess is that the July 31 deadline will be extended like the others before it. Ultimately, Canwest will be broken up into pieces and sold. Competitors will absorb some papers and staff, while others will be axed. Nature of the beast.

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