WINNIPEG – Canwest Global said yesterday afternoon it has launched a “strategic review” of its five E!-branded conventional television stations. Saying they are no longer core assets, the company wants to sell the stations and says it should take no more than six to eight weeks to conduct this review.
The stations in question are CJNT-TV in Montreal, CHCH-TV in Hamilton, CHCA-TV in Red Deer, CHBC-TV in Kelowna and CHEK-TV in Victoria. There are three other E!-branded stations out west, but those are affiliates owned by Pattison Broadcasting.
The sale of the stations is one of several choices being considered by the company following an internal review it has already conducted. Another, worse option was recently mentioned by Canwest TV head Peter Viner in a recent story on Cartt.ca and reiterated by the company on Thursday.
“The options available could range anywhere from the sale of some or all of the stations to reprogramming or perhaps rebranding some or all of the stations or – as a possibility – we might consider shutting some of the stations,” added chief marketing officer Walter Levitt in an interview with Cartt.ca Thursday.
More layoffs are also not out of the question. “We appreciate that for the employees there will be a period of uncertainty as we go through this but we are intending to run the stations as usual through this process,” he added.
RBC Capital Markets has been retained to assist CanWest in the process and the rumour mills have already cranked out the likes of Onex Corp.’s Gerry Schwartz as a potential suitor (although that seems pretty unlikely). It’s not known how much Canwest might be able to get for the former “CH” stations, especially in light of the current economy and the state of conventional TV in general. Ad sales have plummeted over the past four to eight months.
“Over the course of the last year, we have taken a series of steps towards improving the long-term growth of our broadcasting business, focusing our efforts on the areas of greatest return. A key success has been our ability to share content and cross-promote between our strong Global brand and our specialty channels. The progress has been encouraging as advertising revenues in our specialty channels are growing at more than three times the industry average,” wrote Canwest Broadcasting president Peter Viner in a memo to staff yesterday.
“Today, we have transformed our business to a point were we are able to leverage our strong position in specialty to not only improve our position with our dominant Global brand through volume buying of content, but also provide a whole new range of solutions for advertisers.”
This “strong position” does not include E!.
The suitor that might make the most sense for these stations? Rogers Communications. Along with its Citytv over-the-air networks (with multicultural network OMNI, too), the addition of the CH stations could allow the wireless and cable giant to create a larger, third, near-national network. But, it looks to be extremely tough to find a buyer for a broadcast quintet that hasn’t been profitable in a decade and its not yet known if Rogers – or anyone else – will be interested.
Given the state of the economy and the difficulties conventional stations are having in attracting ad dollars, it’s difficult to see how they could be sold as a stand-alone network to any individual or even an existing broadcaster with no specialties – like Pattison, who has also bee suggested as a potential buyer.
“This group of stations has been operated as a second conventional network for just shy of 10 years now and (they) have never been profitable,” noted Levitt.
And over those 10 years, the company has tried a number of programming and branding strategies (remember when CH Hamilton was OnTV – a pan-Ontario station?).
And while Rogers bought the five Citytv stations less than two years ago (in June of 2007) for $375 million, the financial markets were at or near a peak, and the ad climate was much better than it is now. Plus, the City stations are in far larger markets (Calgary vs. Red Deer, Vancouver vs. Victoria, for example) and are better-established brands than Canwest’s quintet of E! stations, so such a purchase price is not at all comparable.
In fact, some have suggested Canwest would part with the stations for little or no money – just to save on any potential shutdown costs. When struggling Quebec broadcaster TQS was sold to Remstar last year by former co-owners Cogeco and CTV, little money exchanged hands.
“These stations have proud histories of serving their communities with strong independent voices,’’ Canwest president and CEO Leonard Asper said in a statement. “However, as they are currently configured, these stations are not core to our television operations going forward.”
And as announced earlier this week, Canwest’s money woes continue to mount so it is doing all it can to meet a number of debt obligations while reconfiguring how it does business.
“We are at the point now in our company where the powerful combination of Global – a dominant conventional network – and our 18 specialty channels, we think strategically is our long-term focus for success,” added Levitt.
But one also wonders though if the 2007 re-branding of the stations from CH to the American entertainment cable channel E! is part of the problem.
Not so, said Viner, in his memo. “When we implemented the re-branding strategy in 2007, it was an attempt to bring some focus to the prime time schedule, lower the average age of our viewer, and reduce the costs of acquired programming – and we achieved these goals but the group of stations remains unprofitable,” he wrote.
