The sale of Canwest’s TV and newspaper assets alters Canada’s media landscape–and the Asper legacy

Any event that involves more than $3 billion changing hands would seem, at least on the surface, to constitute more of a bang than a whimper.

Yet for all the media coverage generated by the sale of Canwest’s television and newspaper holdings in the past several days, a sense of weary resignation also attends the demise of the Asper family’s media empire.

Since Canwest’s television and print divisions filed separate requests for creditor protection, in late 2009 and early 2010 respectively, CEO Leonard Asper has gradually–if, it seems, inevitably–lost control of the conglomerate his late father Izzy built into a Canadian corporate powerhouse. And now it’s all gone.

Last week, Calgary’s Shaw Communications snapped up Canwest Global Communications, completing deals that made the company the sole owner of the over-the-air Global Television Network and Canwest’s array of 21 specialty stations. The $2 billion agreement included hundreds of millions of dollars paid out to Goldman Sachs Inc., which helped finance Canwest’s purchase of Alliance Atlantis Communications in 2007. And on Monday, a group of investors led by Paul Godfrey, president of Canwest’s National Post, announced it had acquired control of the Canwest LP newspaper division, which includes the Post and dozens of local newspapers across the country, for $1.1 billion, including $950 million in cash.

A lot of money is flying around, but none of it is landing in Asper bank accounts–the family has been frozen out while others pick the Canwest carcass clean. Leonard Asper is part of a group, including Rogers and Quebecor, that is reportedly considering a challenge to the Shaw sale on the basis that it violated the rules governing the auctioning of Canwest’s assets, but most observers don’t expect them to be successful in their protest. Barring a dramatic reversal, the Aspers are out of the game just three years after the Alliance acquisition made them one of the most important players in Canadian media.

“The Aspers are no longer in this business,” says Christopher Waddell, associate director at Carleton University‘s School of Journalism and Communication, voicing a truth that not so long ago would have been unthinkable.

Sunni Boot, president and CEO of Zenith Optimedia, says it’s an unfortunate truth to behold.

“It’s kind of a sad day for all of us media buyers, because they are a wonderful company that we admire tremendously,” says Boot, who also lauded the professionalism of Canwest employees in the face of uncertainty. “The respect I have for these people is immense.”

Boot adds that while it would be easy in hindsight to point to the Alliance deal, which added $2.3 billion to Canwest’s already sizeable debt load (pushing the total to roughly $4 billion), as a fatal mistake, it was a strategically sound decision at the time. (It was a key factor underlying this publication’s decision to name Canwest Media Player of the Year in 2007.)

“That was a good deal. When that came on the market after CTV bought CHUM, they had to do that or they would have been out of the business,” says Boot. “In my mind, they had to go out and get that to be the player they wanted to be in the media market.”

Hugh Dow, chairman of Mediabrands Canada, also sympathizes with the Asper clan and shares Boot’s opinion about the Alliance purchase.

“They obviously took a gamble with their acquisition of Alliance Atlantis,” says Dow. “Leonard basically bet the farm, and unfortunately circumstances, some of which were unforeseen at the time–the recession and the impact on advertising revenue–combined with the debt forced the situation that we’ve been watching for the last 18 months or so.”

What observers have been watching is nothing less than the fall of a once-golden media family. It would be easy to view this through a Shakespearean lens, to blame an excess of greed, ambition and a deficit of business savvy for the collapse of a father’s company under a son’s watch.

But that, says Fred Forster, president and CEO of PHD Canada, would be wrongheaded.

“It’s easy to point to Leonard and David and the Asper kids as being responsible, but I think they inherited much of the debt. And obviously they were caught in the financial downturn like everybody else,” says Forster.

“Most people look at it and say they had a high degree of responsibility, but those in the know would say they were saddled with an organization that already had a lot of debt, and they were unable to come to terms with servicing that debt in an environment where all of a sudden revenues were significantly depleted.”

While the Aspers adjust to life after Canwest, the new owners of the company’s assets, along with their competitors and media buyers, are left to re-draw Canada’s media map.

Observers say the likes of Shaw–which placed veteran TV executive Paul Robertson in charge of its new television holdings–and the Godfrey group should be capable of ensuring continuity where necessary while providing a dose of new energy.

As sad as Boot is to see the Aspers go, she is excited to work with Shaw.

“Do we feel that Shaw are going to be terrific custodians? Absolutely,” Boot says. “For Shaw, this is an incredible buy. Fantastic.”

Boot believes Shaw’s acquisition of Global, with its mass reach and vast content, is a critical aspect of the deal. Others, such as Forster and Waddell, believe the true value lies with Canwest’s specialty channels.

“The specialty channels are still getting rates of return of 20% or more, whereas over-the-air television isn’t at the moment,” says Waddell.

“Part of [the Global acquisition] may be simply that it was available very cheap. It doesn’t cost very much, so you take it and you might be able to do something with it.”

And as far as the newspapers go, the feeling within the industry is that Godfrey, who has already promised an increased focus on digital media, will be able to do something positive with them as well.

Dow says strong leadership is crucial to the success of Canwest’s media properties.

“The key thing is that, in both cases, well-known leaders with very good track records have been put in charge,” Dow says. “Both [Robertson and Godfrey] are very well regarded and well thought of in the media community, and both have outstanding track records.”

For the Asper family, though, it’s difficult to find the positives. They’re out of the media business, and it’s unclear if and when they’ll be able to return.

“A lot of what they had, that was tied up in Canwest, has been vaporized,” says Waddell. “I would think it would be difficult to persuade lenders that they should be lending them a lot of money, in the short term at least, and clearly they don’t have the resources to do much without borrowing.”

Others, however, think the Aspers are capable of a comeback.

“I wouldn’t count the Aspers out,” says Forster. “Leonard’s a smart guy and he’s well-connected. “I think we haven’t heard the last [of him].”

Maybe not. There could very well be another act in the Asper media saga. For now, though, the stage has gone dark and silent.