Shaw is Canwest's white knight

[khurramdar]

Shaw is Canwest's white knight
Written by Rose Major
Sunday, 14 February 2010 11:32
Canadian telecoms group Shaw Communications has come to the aid of fellow Canadian Canwest, agreeing to buy a controlling stake in the bankrupt company.

Shaw, which owns digital cable networks as well as the Shaw Direct DTH platform, will acquire a minimum 20% equity/80% voting interest. The equity interest will exceed 20% depending on the number of Canwest creditors that elect cash rather than shares in a restructured Canwest.

Canwest has been in bankruptcy protection since October 2009. Restructuring initiatives have positioned the company as a pure play Canadian broadcaster, owning second-largest Canuck conventional network Global, we well as six niche channels including Fox Sports World, MovieTime, Mystery TV and DejaView.

The company also has a 35% interest (67% voting interest) in the CW Media Group subsidiary which owns or operates the 17 niche channels formerly known as Alliance Atlantis assets. These include the Canadian versions of History, National Geographic and Discovery Health as well as Showcase Diva, HGTV, BBC Canada, Food Network, Dusk, Slice and BBC Kids.

In an investment summary, Shaw cited ownership of content as one of the key rationales for the deal. “As the competitive environment intensifies and viewership habits evolve, we believe that ownership of content and various broadband and mobile rights will become more important in the future… Controlling content rights will help mitigate the risk of over-the-top applications relating to the viewing of traditional broadcasting.”

The new company will operate as a separate private company to Shaw, with its own management team and board. The investment was structured whereby Shaw can increase its ownership in future.

Jim Shaw, CEO and vice-chair of Shaw Communications said: “We are excited about the Investment and gaining effective control of one of the premier broadcasters and owners of content in the Canadian broadcasting industry at a reasonable valuation. We believe that Shaw’s Investment results in a number of benefits to the broadcasting system, including an ability to strengthen local programming, ensure the ongoing viability of the second largest private conventional television network in Canada, and sustain a dynamic and competitive television market.”

Shaw has some 3.4 million subscribers to its services in Canada.

Derek Burney, the chairman of Canwest’s Board of Directors, said: “We are very pleased with the firm investment commitment from Shaw. While there is much work still to be done, Shaw’s commitment represents an important step towards a successful financial restructuring of Canwest and is supported by the Company and the members of the Ad Hoc Committee. We look forward to benefitting from Shaw’s participation in a reinvigorated Canwest, as it is a strong business partner with a proven commitment to the Canadian television broadcasting industry.”

© Rapid TV News 2010