canwest to sell five tv stations in canada

From The Canadian Press

Canwest Global Communications Corp. (TSX:CGS) says it is exploring the sale of five conventional television stations in Montreal, Hamilton, Red Deer, Alta., Kelowna, B.C. and Victoria, calling them non-core assets.

Canwest president and chief executive Leonard Asper said late Thursday that, given the current recession, the company wants to focus instead on its faster growing specialty channels and Global television brand.

"Canwest has come to the determination that operating a second conventional TV network in Canada is no longer key to the long-term success of our broadcasting business," Asper said in a statement after stock markets closed.

"Going forward, this allows us to invest in the areas that provide the greatest return."

The outlets being shopped are part of the company's E! network; including CJNT-TV in Montreal, CHCH-TV in Hamilton, CHCA-TV in Red Deer, CHBC-TV in Kelowna and CHEK-TV in Victoria.

Asper said that, "as they are currently configured, these stations are not core to our television operations going forward."

Canwest said a sale is one of "several options" being considered by the company following an internal review, and that the media company has hired RBC Capital Markets to help with the process.

"We believe this process will lead to significantly enhanced shareholder value," Asper said.

Analysts say the stations, which the company picked up nearly a decade ago, have been losing money for years.

The question now is who will want to buy them in the current economic environment, where shrinking advertising revenues are already taking a chunk out of broadcaster revenues.

Earlier this week, Canwest said it was looking at divesting non-core assets as it reviews strategic alternatives.

The announcement came as Canwest also said its bankers have limited borrowing under the Canwest Media division's $300-million senior credit facility.

The company said its bankers will limit additional borrowing under Canwest Media's credit line to $20 million until Feb. 27. There is already $92 million drawn on the facility.

Canwest acquired many specialty TV stations as part of its $2.3 billion acquisition of the former Alliance Atlantis broadcaster two years ago. That deal, mostly financed by Wall Street investment bank Goldman Sachs, was the biggest deal since Canwest bought the former Southam newspaper chain and other businesses from the Hollinger group for $3.1 billion in 2000.

The Hollinger deal saddled Canwest with a huge debt of about $3.7 billion, a liability that has dragged down the company's finances for years.