More pressure on Rupert Murdoch’s News Corporation to look at the valuation of its $US33 billion of intangible assets after CanWest, the Canadian parent of the Ten Network, cut $C1 billion off the value of its intangible assets.

That boosted CanWest Global Communications Corp’s fourth-quarter loss to $C1.02 billion ($US834 million) after the write-downs on its television business and poor quarterly figures across the board.

The write-down was $C1.01 billion on the value of its intangible assets and in doing so, CanWest joined CBS and the Washington Post Company in cutting the value of their intangible assets because of the slumping outlook for advertising and the North American economy. But reading the report in The Australian this morning, you’d never thought other companies had cut the value of their intangibles and that the one off that the CBS move had seemed, was now a trend in North America.

And in a further development, CanWest says it has been forced to renegotiate with its lenders on its $C3.7 billion in debt to give it more leeway in meeting the restrictions on those huge loans:

Given the uncertainty as to the economic outlook the Company has renegotiated certain provisions of its senior credit facility, including an increase to the total leverage ratio covenant.

With increased financial flexibility and the operational/restructuring initiatives announced on November 12, 2008, the Company believes it will have sufficient liquidity to execute its business plans,” CanWest said in its earnings statement.

CanWest remains dedicated to taking the necessary steps to provide the Company with the flexibility required over the longer-term, including further operational improvements and the sale of non-core assets.

That’s the company really saying that it has no idea about 2009, but it has taken out a bit of insurance by cutting the value of the assets and lifting the amount of money the banks will allow it to borrow.

In effect, the way CanWest sees itself surviving is by gearing up, a risky idea given the gloom and doom that’s about, particularly about companies with high debt levels.

On top of all that, the company expects its 2009 revenues are expected to decline and its shares closed at an all-time low of 73 Canadian cents on Friday, down 90% from $C7 at the beginning of the year.

The company recorded fourth-quarter declines in earnings in Canadian publishing, Australian television operations and even its Turkish radio stations: it’s a company horribly exposed to the global economy (The good point was that it sold radio stations in Britain where media advertising has collapsed).

Canadian television, the cornerstone of the company’s operations, lost $C19 million in the quarter, almost twice as much as what analysts were forecasting as slumping economic conditions (especially in the car and finance sectors) hit the group hard.

The poor financial results were reported Friday night our time in Canada, 24 hours after 560 people were sacked from the various businesses (but not from the Ten Network). Those were the second cuts this year. CanWest chopped 200 people earlier in the year.

Peter Fray

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