CanWest Global Communications

CanWest Global Communications

CanWest Global Communications Corporation (CWG) is one of Canada’s leading diversified media conglomerates and an international presence in the production and distribution of film, radio, and television. Comprising major holdings in print publishing, marketing, Internet portals, and film and television production and distribution in Canada, CanWest also has interests in Australia, Ireland, and New Zealand as well as offices in London and Los Angeles. As of 2001, it commanded a 30 percent market share of the Canadian conventional TV market and had a potential reach to 97 percent of Canadian homes. CWG is also the leader in Canadian newspapers, holding 37 percent of the market. Headquartered in Winnipeg, Manitoba, and until recently headed by an outspoken owner and executive chair, the late Israel “Izzy” Asper, this family-run company stands as one of Canada’s media giants and its first multimedia conglomerate.

Courtesy of CanWest Global Communications Corp.

Bio

Originating as CanWest Capital, the company began its rise as an international media company with the acquisition of a single television holding, a North Dakota station called KCND. After rearranging the call letters to CKND, and headquartering it in Winnipeg, CanWest was awarded a television license in 1974 by the Canadian Radio-television and Telecommunications Commission (CRTC). In 1977 CWG purchased a 40 percent interest in Toronto-based Global Television. By 1982 it owned a further 20 percent interest, and by 1984 the company had changed its name to CanWest Communications and was almost wholly owned by Asper. Since then, CWG has continued to acquire television, publishing, and Internet holdings, pursuing an overall trend toward diversification and vertical integration.

By 1989 Global Television was under complete ownership by Asper, who then modified the company name to its current version, CanWest Global Communications. Throughout the 1980s, CWG acquired television stations piecemeal across western Canada. Starting with the purchase of a Vancouver station in 1987 (since relinquished to one of its competitors) under the subsidiary company CanWest Pacific, other stations were acquired in Saskatoon and Regina, gaining licenses around the same time under the subsidiary SaskWest Television. Next came a station servicing the Halifax and St. John region, followed by a station in Quebec.

However, it was not until the acquisition of Western International Communication Ltd. (WIC) in 2000 that CWG became a full-fledged Canadian network, the third in Canada. Its direct competitors are Bell Canada Enterprises’ (BCE’s) subsidiary Bell Globemedia, which houses the CTV network, and the government-supported Canadian Broadcasting Corporation (CBC). Considered one of the largest buyouts at the time, WIC’s assets were divvied up between Shaw Communications Inc., CWG, and Corus (a subsidiary of Shaw). From this dissolution of WIC’s assets, CWG obtained all of WIC’s conventional television broadcasting undertakings, gaining nine television stations in the process (the ninth added in a separate negotiation from the other eight). CWG’s gains did not happen without criticism from its competitor BCE and the lobby group Friends of Canadian Broadcasting (FSCB). The former felt that this acquisition would give CWG an unfair dominance in strong markets like Vancouver, and the latter felt that its new strength would be put to use purchasing more American programming, thus diminishing the presence of Canadian content. CWG attempted to allay these fears with the promise of an $84.3 million (Canadian dollars) production fund package focusing on homegrown programming, cultural diversity, and media education. Though it was required by the CRTC that CWG divest itself of its then current holding CKVU in Vancouver, CWG’s Global Network went from reaching 16 percent of the Canadian viewing audience in 1996 to 88 percent by the year 2000, and by 2002, it reached 97 percent of Canadian homes.

CWG’s Canadian television assets now include 16 conventional television stations, 11 that make up its Global Network; three independent stations in Hamilton, Montreal, and Vancouver Island; and two CBC affiliate stations in Kelowna, British Columbia, and Red Deer, Alberta. Despite the rapid growth of Canada’s specialty sector throughout the 1990s, the company holds only one analog cable interest, PRIME, which targets the 50-year-old-plus demographic with popular syndications such as M*A*S*H and lifestyle shows like Canadian Travel Show. CWG was quicker to capitalize on the digital specialty licensing wave and has managed to obtain the licenses to 47 channels, though it has launched only six services to date. These digital channels are Men TV, a men’s lifestyle network; Mystery; Deja View, showcasing predominantly American syndicated classics; Lone Star, a western-themed channel; FOX Sportsworld Canada, including sporting events from around the world; and X-treme Sports.

Meanwhile, CWG had been expanding its interests in foreign markets as well as its stake in the newspaper publishing sector. In 1991 CWG acquired 20 percent of TV3 New Zealand, a widely distributed network with international programming that appeals to an 18- to-49-year-old demographic. By 1997 it owned 100 percent of this station and had, in the same year, launched TV4. CWG also has a stake in FM radio interests in New Zealand. In 1992 CWG turned its efforts toward Network Ten, Australia, holding a majority interest in the network and a 60 percent interest in Network Ten’s advertising company Eye Corp, acquired in 2000. In both countries, these networks appeal to a young, hip audience with indigenously focused and imported programming. The Irish TV3 has a 45 percent CWG stake and is Ireland’s first national private network. CWG also holds a 29.9 percent stake in North Ireland’s UTV, as well as its subsidiary holding, UTV Internet. Despite spanning three countries, CWG’s revenue from its international holdings generated only 8 percent of its sales in 2001.

Though CanWest’s interests began in television and that remains its central concern, its largest acquisition to date has been Conrad Black’s Hollinger’s newspaper chain and Internet holdings. This development solidified CWG’s place as the largest media company in Canada. It also stands as Canada’s largest chain of newspapers, including a 50 percent stake (raised to 100 percent in 2002) in the fledgling national daily the National Post. The details of the acquisition sent shockwaves through the Canadian media industry, regulatory bodies, and the government: a $2.1 billion (Canadian) transaction for hundreds of news sources as well as the Internet portal Canada.com. This merger has been closely monitored by the CRTC, CWG’s competitors, as well as special interest groups, and it has spurred a slew of criticisms. Notable among these criticisms has been the newspaper’s editorial bias, sparking a provocative debate in the various competing newspapers in early 2002.

The strategic advantage gained from the Hollinger acquisition was to create news-related content for its growing distribution outlets in television. However, the CRTC limited this potential integration for both CWG and BCE (which owns CTV and the national daily newspaper The Globe and Mail) at the time of their 2001 license renewal. For both companies, it was expected that the print and television newsrooms were to remain separate. As a compromise with the CRTC, each media company has committed to keeping its editorial managers separate but has requested to share news-gathering resources between the print and television holdings. In return, the companies will propose and follow voluntary codes of conduct for news delivery. The CRTC has also forced a commitment by each conglomerate to financially support an independent monitoring committee.

As part of creating a synergistic news-gathering structure, CWG needed to feed its growing distribution chains with entertainment content. During its growth in the 1990s, CWG’s 1998 purchase of Fireworks Entertainment Inc., a Canadian film and television production company, consolidated its position as a content producer. This company was created in 1995 and since its acquisition has expanded to become the Toronto-based headquarters for Fireworks Television, Fireworks Pictures, and Fireworks International. With this purchase, CWG also acquired Skyvision Entertainment’s library, a purchase Fireworks made in 1996. The Fireworks subsidiaries focus on film and television production, distribution, and financing projects and have offices based in Los Angeles and London.

In 2000 Fireworks bought the film library of Dutch-based ENDEMOL International Distribution (EID), doubling CWG’s distribution rights for more than 1,200 hours of television programming. Between Fireworks and EID, CanWest now has access to television series such as Beastmaster and Relic Hunter, made-for-TV movies such as The Audrey Hepburn Story, as well as feature films such as Johnny Mnemonic, Rules of Engagement, and An American Rhapsody. Moreover, the same year as the EID acquisition, CWG entered into a joint venture with Samuel Goldwyn Films and Stratosphere Releasing, forming IDP Distribution.

As of 2002, CWG boasted a strategically built diversified media empire that dominated the Canadian market and had vertically integrated its strengths into its national and international interests. However, as a Canadian media company, it is subject to Canada’s stringent rules and regulations concerning content, regulated by the CRTC, and to pursuing the mandates of the 1991 Broadcasting Act. CWG’s Global Television network has been criticized over the years by lobbyists and competitors alike for reneging on its Canadian-content obligations. A typical Global prime-time lineup is dominated by American first-run and syndicated shows including The Simpsons, The X-Files, and Seinfeld. Though CWG has counterargued that it has fostered some of the top-rated Canadian dramatic series, such as the show Traders (considered to be an underserved genre in the Canadian television landscape), FSCB has noted that CWG spends only 18 percent of its revenue buying CanCon.

However, CWG’s television interests have fulfilled their obligations by servicing Canadians with local and regional news programming through CWG’s stations. Moreover, in its annual report CWG announced that in the spring 2001 “sweeps” month, it was the top-rated network in Canada, averaging a 12 rating compared with a 6 rating for CTV, its closest competitor. PRIME, CWG’s analog specialty channel, continues to grab audiences, showing increased ratings for 2001.

CWG has shown throughout its rise to conglomerate status that it is an ambitious, tenacious, and strategic player in the Canadian and international media landscape. Asper, who relinquished formal control in 1999 to son Leonard and passed away in October 2003, went on record stating that his goal for CanWest Global was to rival global media giants like Viacom Inc. and AOL-Time Warner Inc. It remains to be seen, given CanWest’s $4 billion (Canadian) debt since its Hollinger acquisition and the economic downturn in North America, whether CWG’s current toeholds in its various markets will foster Asper’s vision.

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