There’s around 24 hours to go until we know whether Canwest Global, the parent of the Ten Network, is going to survive yet again, or be put out of its misery and into bankruptcy in Canada.
Will its bank and noteholder creditors, who are owed close to $C4 billion, finally lose patience and pull the plug?
Logic says they should, reality says there are no buyers for any of the Canwest assets at the moment, even at knockdown prices, so it will make sense to keep the company on a drip and try to restructure the debt so it at least remains serviceable.
That’s the commercially-sensible thing to do. After all Warren Buffett articulated the feeling of most in the investment community about the future of the newspaper sector when he told his company’s AGM at the weekend that he was not interested in investing in the sector again, ever.
Many people obviously feel the same way about broadcast media.
Buffett’s view helps explain why there are no buyers for any of the assets of Canwest, or Independent News & Media in the UK (which controls APN News & media here whose sale failed late last year as INM tried to raise cash. INM has a 200 million euro loan falling due in two weeks, and no sign of the money or a deal from the bank).
But the UK is where the desperates are in broadcast and print media, more than in the US. Regional newspaper groups like Johnstone Press and Daily Mail Trust are struggling, as is Gannett’s UK chain of local papers. Pressure is mounting to allow uncompetitive mergers or content and resource sharing deals. Local UK radio and TV news is in danger of disappearing, except on the BBC. If deals, mergers and the like are not allowed, the BBC could end up as the dominant UK media group, with competition from Rupert Murdoch’s BSkyB and News International newspaper arm, plus a gang of enfeebled dwarfs.
Some UK commentators are now wondering if the British Government would allow Murdoch to buy one or two of the major papers from the struggling INM. Murdoch would be criticised by investors if he did though after wasting $US2.8 billion in write-offs on The Wall Street Journal.
Besides INM, ITV, Britain’s biggest commercial network, is facing a move by shareholders to install a surprise choice as CEO to try and save the business. Channel Four, the quasi Government owned commercial broadcaster, is facing a 12%-plus fall in 2009 ad revenues that could cost it 100 million pounds; and the Sports-based Pay TV channel Setanta is close to collapse unless 100 million pounds can be conjured out of nothing in the next couple of weeks.
Murdoch has a 17.9% stake in ITV held through BSkyB. The person mentioned as the new CEO is the old CEO of Sky, Tony Ball. It has raised speculation of some sort of last ditch deal to keep ITV alive. But then the rival sports Pay TV channel, Setanta also needs rescuing. London reports say a new management team is trying to raise 100 million pounds urgently, while trying to defer, cut or not pay for some sporting rights it has contracted to purchase.
Sir Robin Miller, the Emap publishing veteran, has been parachuted in as Setanta’s chairman to lead it through an emergency refinancing.
ITV faces a 20 million pound bill if Sentana collapses. London reports say Setanta is understood to have agreements in principle from sports bodies including the PGA golf tour that could let it cut up to 20 million pounds from the estimated 120 million a year it will spends on rights from 2010.
The Times reports that while Channel Four’s advertising income fell from 825 million pounds below 800 million last year, it is facing a possible 12% fall this year, which would take revenue to or under 700 million pounds. Channel Four has been cutting spending on new programs at home and on imports.
Meanwhile, Goldman Sachs JBWere said this morning they expected the third quarter earnings result to be revealed by news early Thursday morning, Australian time, to be the worst the group will experience this year
“FY09 guidance is for a 30% decline in operating income. Consensus estimates are for a 32% decline and we estimate risk still lies to the downside, albeit the rate of decline is slowing. Whether NWS (News) maintains its guidance for FY09 will be a function of whether success in film is enough to offset the decline in TV and Newspaper earnings.”