MONTREAL -- CanWest Global, which had been attempting for several months to restructure its finances in order to keep the cash flowing and avoid having to seek bankruptcy protection, got some good news and bad news last week.
On the upside, the Winnipeg-based media company was granted yet another two-week reprieve, but it is still far from settling its issues with its lenders.
Chances are CanWest Global -- one of Canada's leading TV buyers -- will still be shelling out the big bucks for Hollywood fare ... at least for now.
That's because, despite the cash crunch at the parent company, the broadcasting division still needs to find hit shows to feed its main network, Global, in order to compete with fierce rival CTV.
CanWest and CTV are experiencing financial difficulties, with both companies recently announcing major staff reductions. But CTV remains the ratings leader in Canada and, if CanWest wants to put a dent in CTV's hold on the ratings charts, then it will still have to open its pocketbook at the upcoming May Screenings in Los Angeles.
Last month, the company was unable to make a C$30 million ($24 million) interest payment on its senior subordinated notes, and the result was that the holders of these notes were in a legal position to ask for the company to pay back the entire $614 million it owes them.
The senior lenders made a deal with CanWest on April 22 to extend the waiver of a number of borrowing conditions until May 5.
The root of CanWest's financial woes is simple. It owes around $3 billion, and it racked up a good chunk of that debt with its $1.8 billion purchase -- in partnership with Goldman Sachs -- of Toronto-based broadcaster Alliance Atlantis in 2007. The ironic wrinkle is that CanWest still has plenty of attractive assets, notably the various cable channels it picked up via Alliance Atlantis.
These channels -- like drama outlet Showcase and History Television -- are largely recession-proof since they generate monthly subscriber revenue; in its most recent quarterly results, CanWest reported that operating profits from its cable channels soared 60% to $26 million.
Global, even if it trails CTV, remains a network that would undoubtedly spark a bidding war if CanWest ever had to relinquish it. In the most recent ratings results, Global had three of the top 10 shows in the country, with "House" (No. 3), "NCIS" (No. 7) and "Survivor" (No. 9).
CanWest has been looking into the possibility of selling some of its assets in order to make its payments, recently announcing that it would like to offload its secondary E! Network. But this is hardly an ideal time to be selling TV networks given the worldwide recession in general and the downturn in the broadcast biz in particular. There is also speculation that the Canadian company may also try to interest buyers in its stake in the Ten Network in Australia but, again, that asset was worth a lot more a couple of years back when the economy was in better shape.
There is also a lot of talk in Canada that the federal government will unveil some kind of bailout package to help the cash-strapped broadcasters like CanWest and CTV. But many, including the Writers Guild of Canada, are totally opposed to this notion. These critics note that though profits at the conventional TV networks are down, they're up for the many cable channels owned by CanWest and CTV.
It's also possible that broadcast regulator the Canadian Radio-Television and Telecommunications Commission (CRTC) will ride to the rescue of CanWest by perhaps loosening its license conditions, with some suggesting the regulator may allow Global to air more American fare in primetime.
CanWest's and CTV's license renewal hearings are set to take place later this spring in Ottawa.
Contact the Variety newsroom at
news@variety.com