Asper out, but for how long?

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This article was published 05/03/2010 (5916 days ago), so information in it may no longer be current.

Leonard Asper resigned as president, CEO and board member of Canwest Global Communications Corp. Thursday, but it doesn’t mean he’s abandoning the media empire his father founded in the ’70s.

The official version from both the company and a memo from Asper to Canwest employees is he is leaving "to pursue other business opportunities and to avoid any concerns regarding potential conflicts of interest."

The conflict of interest part became blazingly clear on Feb. 19 when it was disclosed Asper (with some level of participation from siblings David and Gail Asper as well) was a participant in an 11th hour bid for the Canwest broadcast properties by Catalyst Capital Group, a private equity firm specializing in investments in distressed companies.

That bid was in direct opposition to the one the court, Canwest’s board and the creditor group that holds the debt Canwest defaulted on all endorsed from Calgary-based cable television empire Shaw Communications.

The Shaw bid calls for an injection of $95 million in new equity for 20 per cent ownership and 80 per cent voting control of Canwest’s television assets. (The bid does not include the newspaper assets, which are controlled by a separate court-supervised process that is seeking new owners for those assets.)

But the popular wisdom is that Canwest may very well still be in play.

"The fact that Leonard is stepping aside from his leadership role to avoid conflict speaks volumes about his desire to remain relevant to the company going forward," said Carmi Levy, an independent technology and media analyst. "He is essentially gambling that the alternate bid fronted by Goldman Sachs and Catalyst will ultimately prevail, despite the fact it has already been turned down once in court. What they are doing is regrouping to take another run at it."

It may not really be that much of a gamble, because his role at Canwest — which has been under court-ordered supervision since October — has been reduced to figurehead. Noteholders who are owed $761 million had already installed their own chief restructuring officer and since October have been in charge of the restructuring program.

But if his efforts fail, Asper’s resignation will be the definitive end of an era at Canwest, a company run by Aspers since it was formed in 1974 (but for a brief period when Peter Viner was CEO) that continues to dominate the Canadian media landscape.

The company’s Global Television network and its stable of 18 specialty channels including those held in partnership with Goldman Sachs in the division called CW Media, all continued to operate. The wedge Asper is looking to use to keep the Canwest bloodlines alive is the contentious arrangement Canwest has with Goldman Sachs (GS). The Shaw bid is contingent on the GS deal being renegotiated.

Goldman Sachs has made it clear it wants no part of that and has expressed its annoyance to the court that all discussions leading up to the approval of the Shaw bid had left it completely out of the process.

It has stated its interest in supporting the Catalyst/Asper proposal the court rejected two weeks ago.

In explaining her reasons for the decision made in Ontario Superior Court on Feb. 19, Madame Justice Sarah Pepall wrote earlier this week that regardless of the wisdom of leaving the GS matter to be decided at a later date, "the GS parties are in no worse position."

But she did acknowledge Goldman Sachs is concerned the process the court approved is designed to take value away from Goldman Sachs.

"I continue to be of the view that a commercial and negotiated resolution of that issue is in the best interests of all concerned," she said. "The parties must now move forward and have a reasonable dialogue."

There seems little doubt Leonard Asper is determined to be part of that dialogue.

martin.cash@freepress.mb.ca

‘We are nowhere near the conclusion of this process. It would not be advisable for Shaw to count its chickens just yet’

— independent analyst Carmi Levy

 

 

Time for Plan B,

or something else

Leonard Asper still could have some cards up his sleeve in the battle for Canwest:

 

Plan B

Since the Shaw bid actually was richer than the Catalyst/Asper bid, the Asper group could pester the court with a sweetened offer.

 

Plan C

Shaw’s bid is conditional on renegotiation of the Goldman Sachs partnership deal with Canwest called CW Media. It owns 13 specialty television channels, including Showcase, Slice, History Television, HGTV Canada and Food Network Canada. It is a complicated joint venture that pays Goldman, which owns 65 per cent of that partnership, handsome returns. Some say it could be worth anywhere from $700 million to $1 billion. CW Media is not currently part of the court-supervised bankruptcy protection process, but if a renegotiation of the joint venture occurs that makes Goldman a Canwest creditor, it could hold a veto on any deal that lets the company emerge from court protection.

 

Plan D

Since Goldman, Catalyst and the ad hoc committee that speaks for the noteholders are basically all Wall Street money managers, they could come to some kind of understanding that could leave Shaw high and dry, especially if Goldman Sachs is adamant it wants to continue to retain its original Canadian partner.

 

Plan E

Whenever a television licence changes hands, a fee totalling 10 per cent of the purchase price must be paid into a fund to benefit Canadian television production. Catalyst has said Shaw is looking to avoid that — which could be more than $150 million if the CW Media assets are included. If the Aspers were part of the purchasing group, there would effectively be no change in ownership and that fee would not be necessary. That fee might make the deal too rich for Shaw.