Canwest Global Communications has prevailed over co-owner Goldman Sachs & Co. in a court tussle over 13 Canadian specialty channels.

Justice Sarah Pepall of the Ontario Superior Court of Justice ruled Canwest Global was within its rights to transfer control of the specialty television channels from a Goldman Sachs’ holding company to its TV unit, Canwest Media, just before it filed for creditor protection on Oct. 6.

The Ontario court said in a 19-page ruling that the pre-filing maneuvre gave Canwest ‘a reasonable opportunity to develop a restructuring plan.’

Justice Pepall rejected a plea by Goldman Sachs that dissolving their joint venture and tipping the 13 specialty channels into Canwest Media unfairly placed them under the control of US bondholders, who now control the debt-laden broadcaster’s destiny.

Canwest executives did not comment publicly on the court ruling.

But privately, broadcast executives insist ‘nothing has changed’ regarding the specialty channels. They continue to generate revenues and remain outside the court-directed restructuring.

At the same time, the specialty channels remain subject to a 2007 shareholders agreement with puts and calls that include the potential for Goldman Sachs to force a sale of the assets.

The 2007 agreement was hammered out to ensure the overall $2.3 billion deal to purchase then Alliance Atlantis Communications conformed with Canadian foreign-ownership rules.

As part of that arrangement, the shareholders agreement includes drag-along rights that allow the Wall Street bank as a majority shareholder to force Canwest to join in the sale of the specialty channels and divide up the proceeds if the Canadian broadcaster defaulted on its debt and filed for creditor protection.

Canwest has not indicated whether Goldman Sachs has signalled it will exercise those drag-along rights.

From Playback Daily