It’s well known that Canwest Global, the parent of the Ten Network, is desperately trying to avoid collapse as its creditors lose patience and consider pulling the plug. And so is Independent News & Media in the UK — the current paths of both companies are eerily similar.
Canwest’s costs are being pared here, clipped there: there are short working weeks, holidays have been forced to be taken — travel, accommodation, everything. Small TV stations in Canada are under threat of sale or closure to save money. Five-hundred-and-sixty jobs have gone or are going from across the group, but perhaps the most glaring example of cost-cutting came overnight.
Canwest’s National Post will suspend publication of its Monday edition for nine weeks this summer as a cost-cutting move. That’s right, readers can have a three day weekend, but as a friend who has read it recently said, when told of the move, “will anyone notice if it doesn’t come out?”
The three-day weekends will start on 1 June.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
The news comes ahead of the release tonight in Canada of Canwest’s second quarter and six monthly results.
The Post has already cut its weekday editions in Saskatchewan and Manitoba and stopped home delivery in Atlantic Canada a year ago.
Canwest has a $C3.9-billion debt and continues to bleed. It has already laid off 560 employees, and earlier this month the company posted a net loss of $C1.44 billion for the three months ending in February.
Rather than file for bankruptcy, the media conglomerate keeps negotiating with its creditors for extensions on its debt payment. The latest deadline for the banks and 8% note holders is May 5, next Tuesday.
The company owns a string of daily newspapers across the country, as well as Global Television and other media holdings.
And, in an ironic twist, Canwest Global’s problems and the allied collapse in its share price has played a big part in the poor results for its major shareholder after the Asper Family.
Fairfax Financial is a big Canadian insurer and investor and has taken stakes in Canwest and other Canadian media groups (Torstar is another).
Overnight Fairfax blamed the poor performance of these investments and the markets for its poor first quarter performance.
Fairfax Financial had a net loss in the first quarter because of losses from falling investment values.
The Toronto-based insurance holding company said it had a loss of $US60.4-million, in the March quarter, compared with net earnings of $US631.8-million, in the same quarter of last year.
Revenue almost halved to $US1.28-billion from $US2.37-billion. And net losses on investments were $US153.0-million in the first quarter, principally due to the inclusion of $US213-million of impairments recorded on common stock and bond investments. That compared with investment gains of $US1.07-billion for the same period a year earlier.
Meanwhile, in London, Tony O’Reilly’s Independent News & Media is following a curiously Canwest-like path towards possible implosion.
Banks, the bondholders and the company have been unable to do the sort of deal to rollover or refinance a 300 million euro bond that falls due in three weeks time.
That delayed the release of the latest financial results twice, until last night, when INM finally put out this statement.
Its auditors, PricewaterhouseCoopers, raised doubts over the company’s ability to continue as a going concern. Debt is rising, cash flow and earnings are falling and the company is close to breaching covenants on loans that could see other loans called in.
A net debt-to-earnings before interest, tax, depreciation and amortisation covenant will be tested in late June. EBITDA fell 56% last year and is expected to fall to 200 million to 240 million Euros, the company warned overnight.
Net debt is 1.3 billion Euros and Mr O’Reilly and his antagonist, Denis O’Brien, a Dublin billionaire, are both counting on the banks to blink first and rollover the 200 million Euros due later this month as part of an overall refinancing of the huge debt burden.
INM reported a slump in pre-tax profits from 248.4 million Euros to 165.4 million. It confirmed the cancelation of its dividend and warned it was likely to breach its debt covenants in June.
But the company said it was confident of reaching agreement on all outstanding issues, just like Canwest in Canada.
The parallels are eerie, as INM controls the healthier APN News & Media locally, whereas Canwest controls the reasonably successful Ten Network.