Winnipeg — CanWest Global Communications Corp. said Friday a goodwill impairment charge in its publishing operation led to widened losses in its third quarter, adding to mounting financial woes at the Winnipeg-based media conglomerate.
CanWest reported a loss of $110-million or 62 cents per share for the quarter ended May 31, widening year-earlier losses of $28-million or 16 cents per share.
The company said the loss included the $247-million impairment charge and foreign currency swap losses of $177-million.
Losses were offset somewhat by $368-million in foreign exchange gains from unhedged debt denominated in U.S. dollars.
CanWest described the impairment charges as “consistent with those of other media organizations.”
Quarterly revenue sank to $727-million from $846-million reported the year before, as all CanWest divisions saw decreases in top-line performance.
Revenue declines were steepest in the Australian Television and Publishing operations, at 22 per cent and 19 per cent, respectively. Revenue at the Canadian television division dipped two per cent from year-earlier levels.
CanWest has been struggling under a $4-billion debt load and is working with creditors to recapitalize the company.
It said negotiations with creditors continue, but cautioned the company may not be able to survive as a going concern if efforts fail.
“The Company believes a significant reduction in its debt is necessary to resolve its liquidity issues and to continue to operate,” the company said in a statement.
“Failure to complete an agreement in principle on a recapitalization transaction ... could result in a demand to immediately repay all CanWest Media Inc. debt.”
But CanWest chief executive Leonard Asper struck a more optimistic tone in Friday's statement.
“Even in a difficult economy we continue to have industry leading results in our business units,” he said.
“While much attention has been focused on our efforts to recapitalize, we are continuing to invest in our businesses in order to drive operating results.”
A company once worth more than $2-billion years ago and about $600-million in early 2008 now has a stock market value of just under $7-million and faces an uncertain future and likely major restructuring to deal with its massive debt load.
The CanWest group, which includes the National Post newspaper and big city dailies across Canada, Global television network and other broadcast operations in several countries, is struggling under about $4-billion in debt. The company has been negotiating for months with various bankers, bondholders and other creditors to come up with a plan that would allow CanWest's businesses to continue operating.
CanWest has also been struggling to sell off assets to appease the lenders, and last week agreed to sell two of its local TV stations – CHCH-TV in Hamilton and CJNT-TV in Montreal – to specialty television company Channel Zero.
In the previous quarter, CanWest reported a net loss of $1.44-billion, including a $1.19-billion writedown of assets, mostly in its newspapers. Revenue was $637-million, down by nine per cent from $701-million.
The company has been struck by an overall downturn in the media industry, which has affected advertising revenues at its newspapers and television stations.
Many U.S. newspapers are restructuring under bankruptcy protection or are up for sale and broadcasters are also writing off the value of their money-losing conventional stations.
CanWest was once a high-flyer on the stock market as investors valued its prized stable of newspapers, TV stations and Internet properties. But the company controlled by Winnipeg's Asper family through a dual share structure has been fighting financial headwinds for years after an acquisition binge fuelled by debt.
The economic downturn only worsened the debt load CanWest was carrying on its back from the acquisition of the Alliance Atlantis specialty TV channels and other assets for $2.3-billion in 2007, and the $3.2-billion cost of buying Conrad Black's Hollinger group in 2000.
Analysts have speculated for months that a major restructuring of CanWest or possible bankruptcy protection filing could see the company streamlined or split up into various pieces that could be sold to reduce debt.
© Canadian Press
