Yet another major Canadian company has declared its insolvency. CanWest Global’s broadcasting assets, i.e. the Global Television network, along with the Asper family’s daily leaflet, the National Post, have been awarded court protection from their creditors under the Companies’ Creditors Arrangements Act (CCAA).
There will be very little sympathy for the Aspers who have consistently put quantity before quality in Canadian media. But we should remember the 1,700 or so employees of these operations, including more than a thousand unionized CEP members at the television stations.
The inherent unfairness of corporate insolvencies is that worker pensions are not given priority when the assets are carved up, and under federal pension law if a pension plan is ended, there is no requirement for the company to pay any deficit. This was a key issue before Ted Menzies who earlier this year was commissioned to inquire into federal pension law and regulation, but who has since gone AWOL. (His report was expected in June.) CanWest owes over $30 million to the pension plan, including special payments of $5 million annually for past service.
The restructuring of CanWest will now inevitably change the landscape of Canadian media and quite likely refocus Canadian cultural policy. The proposed restructuring will put majority ownership of the television assets into the hands of three hedge funds, two of which are US based. That prompted the Globe and Mail to comment yesterday, “Since broadcasters must be majority owned by Canadian citizens, the Aspers could be kept within the fold to appease federal regulators.”
CanWest’s unions and culture policy activists will scrutinize the ownership shifts, especially after the sleight of hand maneuver in 2007 to buy Alliance Atlantis that put an end-run on Canadian ownership regulations. That leveraged buyout of the film distributor and specialty TV channel owner cost $2.4 billion, with most of it coming from the US investment bank, Goldman Sachs. The deal was structured to give the Aspers a majority of voting shares, while Goldman Sachs hold a large majority of the equity.
In August of this year when CanWest’s deteriorating financial situation became clearer, CEP sent a message to the federal government warning that US creditors were already assuming a controlling position in the company over-all.
We will now be told that the business model for Canadian broadcasting is broken and that we need investors — including foreign owners — to rescue us. Certainly the Asper model has failed, but that model was based on selling American culture at the expense of Canadian culture and Canadian media workers. As CEP Media VP Peter Murdoch said yesterday, the Asper model paid $49 million in salaries to 8 individuals over the past 7 years, while more than 1,000 media professionals lost jobs at CanWest Global in the same period.
The Asper model has failed, and there is a chance now to build a model based on Canadian news and drama, using the skills of Canadian media workers. But if workers are sold out again now, I suspect that Canadian culture will suffer the same treatment.