Hard-luck Canwest newspapers seek single, motivated buyer
The bidding process has begun for Canwest's newspaper publishing group and the company has made it clear it prefers to sell the assets as a whole. It's a stance they support, media agency execs say.
Canwest’s newspapers may all be one big media family now, but as the sale of the division goes forward, many are wondering if bidders will be looking to purchase the division as a whole or just to cherry-pick the best parts?
Ideally, it would be the former, Canwest’s SVP of public affairs John Douglas says – a sentiment that Canadian media experts say they share.
It was announced last week that the Canwest newspaper division – totalling 10 major-market dailies and 35 community newspapers – was up for sale following the company’s move into creditor protection Jan. 8. This week, reports surfaced that a group led by former Canadian senator Jerry Grafstein had placed a bid for the chain’s choicest assets: the Ottawa Citizen, Montreal Gazette and National Post.
However, the company and its lenders have made it clear they do not necessarily have to entertain such bids, because there is already a ‘floor price’ offer on the table from a consortium of senior secured lenders, Douglas says.
‘There is, right now on the table, a concrete bid, for the full integrated company. When we initiated the sale and investor solicitation process, we made it clear that our preference was for bids for the consolidated publishing business,’ he emphasizes. ‘There’s more value in the integrated chain, through its synergies, through its sharing, through its buying power, sharing of information and its appeal to the marketplace. We recognize that that and we believe that the market will.’
Douglas adds that it is only the beginning of the first of two phases in bidding process, the first of which extends eight weeks into early March. He says the company expects to receive many more bids, and that they will include offers for the division as a whole.
It’s a viewpoint that’s shared in the media buying community. Toronto-based M2 Universal chairman Hugh Dow says the Canwest papers represent important media properties that he would like to continue to see as viable options for the agency and its clients.
‘The best possible outcome is obviously that the entire list of newspapers are sold, either to one purchaser or a consortium of purchasers, and what we would not want to see as a media buyer is any of the properties left in limbo,’ he tells MiC, adding that M2 Universal clients execute strategies that include all of Canwest’s media properties, a feat that is obviously made easier and more cost-effective under single ownership.
‘It’s a pretty critical component of what we’re looking for these days,’ he says, adding that Canwest’s strategy of ‘breaking down internal silo walls’ has been an important aspect of their appeal to media buyers. ‘Where in fact you’re dealing with a media owner that has a philosophy of convergence and ensuring there is collaboration internally, that is of course the preferable route to go.’
Sunni Boot, CEO of Zenith Optimedia Canada, also agrees that the best outcome for media buyers would be to see the division sold as a whole.
‘I would love to see it sold as one complete package because it’s such a strong network of top brands. These are the best newspapers in Canada [and] we like these papers very much. And obviously we don’t want to see it broken up at all, because right now they are being purchased as one. I think it’s better for the advertiser to have it purchased as a single entity. From my perspective, that gives us both media efficiencies and operational efficiencies and I’m looking for both.’
If the Post were to be separated from its Canwest family, Boot says, the best outcome would be that the Post retains an informal relationship with CanWest television and other outlets. Given the value of the newspaper-network package to certain advertisers, she says media buyers are looking for the ability to implement cross platform initiatives.
The company’s broadcast division is also under bankruptcy protection, with reports last week naming Corus Entertainment and Astral Media as potential suitors for the company’s 13 specialty channels. Breaking up that division into individual parts would be ‘a disaster for the advertiser,’ Boot says.
‘I have absolutely gone on record with our advertisers saying that’s the last thing we want.’