‘From Winnipeg to the World.’ The phrase – taken from the title of a CanWest Global-sponsored book marking the company’s silver anniversary – summarizes the big dreams and even bigger accomplishments of Israel H. Asper, who started raising capital for what was intended to be a merchant banking company 25 years ago. The company name, Asper stipulated to his partner, would have to include the word CanWest, and so when the financing for the undertaking was complete, the CanWest name was born on July 7, 1977.

The merchant bank was put in place by Asper, fresh from leading the Manitoba Liberal Party, and his partner, Gerald Schwartz, then working as a Wall Street investment banker. Backed by Schwartz’s experience with leveraged buyouts and high finance and Asper’s tax law expertise, political connections and determination to build from a western base, the pair presented their dream to potential investors from Montreal to Vancouver. When $20-million in financing for the merchant bank was finally set, CanWest Capital Corporation got rolling.

In effect, Asper says, the investors ‘put the money [they were] prepared to lose’ into a blind pool, promising dividends in 10 years. Harry Ethans, now senior VP of media integration at CanWest Global, says the approach was revolutionary. ‘CanWest Capital Corporation pioneered, in a grander sense, the concept of using the banks to borrow money to acquire other people’s assets. We took a conservative fiscal nation by surprise out of an obscure backwater in Winnipeg.’

Although Asper had been in the broadcasting business for a couple of years, including his involvement in rescuing near-bankrupt Global Television in 1974 and launching CKND-TV Winnipeg in 1975, he did not intend for CanWest to be exclusively about media. In fact, investments by the merchant bank reflect a diversified strategy, and the parent company’s business interests today still extend beyond info and entertainment.

So why did Asper, a man who had learned to assert himself on Winnipeg schoolyards in his youth, put so much energy into TV?

‘In Winnipeg at the time, and in Regina, Saskatoon, Calgary and Edmonton, there were no local [TV] voices,’ he recalls. ‘When [CKND] got licensed in 1975, it was just starting to happen. All the media were owned in Central and Eastern Canada…. But that western interest was part of the drive, and it tied in with my political views. Plus there was the fear of unemployment. After politics, your head is a bit scrambled. You can’t go back from $5-billion hydro projects to drawing up people’s wills [as a tax lawyer]. Communications is infinite, and people said it couldn’t be done.’

Asper’s need to work on big-scale projects has since been satisfied many times over. CanWest’s industries include broadcasting, film and TV production and distribution, outdoor advertising, newspapers, Internet, radio, database marketing, and the convergence of the lot. Beyond its actual business activities, CanWest also runs a foundation.

As it approached its 25th anniversary, CanWest said it is ranked 59th among the world’s media companies. Certainly, the company has made stunning progress in a quarter century, transforming its modest media assets into a multibillion-dollar, diversified empire with interests in growing media companies in four Commonwealth countries.

In Canada, following years of buying media properties and launching new ones, CanWest’s presence is felt from coast to coast through newspapers, TV stations, Internet or all three.

In print, the company touches dozens of communities because of the 14 major dailies, 18 smaller dailies and weeklies it picked up when it bought the Southam papers from Conrad Black. CanWest also owns the National Post.

In terms of television, Canadian cities host 11 CanWest-owned conventional TV stations, and the company owns and operates one analog specialty channel and four digital specialties. It also co-owns and operates two other digi channels, and has many more licences.

Internet reach is wide through canada.com, also purchased in the Southam deal, a Web portal that houses globaltv.com, careerclick.com, carclick.com and faceoff.com. It owns a majority in an amateur sport website, AllCanadianSport.ca, and minority shares in three other Web properties.

And what of CanWest Global’s impact on the business of media in Canada? Global’s arrival was anathema to the existing private network, CTV, and observed with raised eyebrows by the leaders of the public broadcaster which had been on-air since 1952. Certainly, eastern Canadians played an important role in CTV, with the likes of Toronto’s Eatons and Bassetts controlling Baton Broadcasting and Toronto station CFTO-TV. But the CTV owners were not all from the east and opposition to Global had more to do with competition for advertising dollars.

Global’s aggressive sales strategies, its quick and enthusiastic adherence to the model of importing U.S. shows to fill its schedule with advertiser-friendly programs and its lean operating budgets set the industry on a fiercely competitive path that it has never left.

The early years

From 1977 to 1984, Asper concentrated on resuscitating Global, seeing CKND on its way under Don Brinton, contemplating the future of CKVU-TV Vancouver by providing financing for its majority shareholders, and getting into, and out of, pay-TV in the U.S. By 1982, CanWest had acquired a 60% interest in Global Television, setting the stage for its dramatic takeover. In 1984, Schwartz departed CanWest after his partnership with Asper and the merchant bank was dissolved and set up his own business.

As part of the CanWest Capital dissolution, Asper kept the rights to the CanWest name, created a new parent company, CanWest Communications Corporation, and emerged from a complex restructuring with a 60% interest in GTN and 63% of CanWest Broadcasting Ltd.

Although the merchant bank had seen some remarkable investment hits and misses, the turnaround at GTN was fascinating, and its success is attributed in large measure to the late David Mintz.

Mintz first started working for Asper and his Global partners, Paul Morton and Seymour Epstein, in 1977, hours after the trio had received CRTC approval for a deal to take over GTN. Mintz, who signed on as GTN’s Western Canadian ad rep, increased western sales from $70,000 to about $1.5 million in one year. After his second year, he agreed to become president of GTN, and stayed until he retired in 1993.

But Mintz was key not only in terms of Global’s profits – he also helped set a pattern that has defined private TV in English Canada. As Allan Levine writes in From Winnipeg to the World, Mintz recognized the need to import popular U.S. programming to attract serious ad revenue and finance Canadian operations and programming. Mintz brought Global such early cash cows as The Love Boat (and ran it up to 11 times per week for awhile), Charlie’s Angels, Super Dave, T and T and many more. Later U.S. hit shows included Cheers – a steal from CTV – Hill St. Blues, Murder, She Wrote and The Young and the Restless.

Conquering the West, going solo back east

With GTN on a promising path, Asper turned westward and moved to obtain licences in Saskatchewan. Naturally, the province’s existing TV licensees were upset by the CRTC’s 1985 decision to award CanWest licences for Regina and Saskatoon. The opponents appealed to the Mulroney government, which ordered another hearing. Again, CanWest prevailed, but Asper had to overcome federal interference in the allocation of space on public airwaves before he finally, in 1987, saw the STV stations on-air.

In 1984, Asper triggered an option to take over CKVU. The owners resisted, and the matter went before the courts and the CRTC. CanWest eventually won and the Vancouver station joined its roster in 1988.

The man chosen to redirect CKVU was Brinton, who had headed CKND and launched the STV stations. Brinton says his work on the schedule, staffing and sales department at CKVU set the stage for his successor, Peter Viner, who relaunched the station as U.TV and made it market leader among 18- to 49-year-olds by 1996.

On the eastern front, years of litigation launched by GTN’s three partners in a fight for control ended with a court-ordered auction in 1989, which CanWest won on Dec. 14 with a $150-million bid.

‘Global’s ultimate takeover,’ Asper says, ‘was the greatest corporate shootout that has ever happened in a boardroom in Canada.’ If CanWest had lost, he adds, ‘the remnants of our assets would never have been as valuable. The western stations would not have had a cornerstone in Eastern Canada.’

The ’90s: stock markets, South Pacific, South America

In the fiscal year ended Aug. 31, 1990, CanWest reported net earnings of $6 million, whereas, according to a media report, Canada’s 100 or so private TV stations had combined profit under $1 million. The next year, CanWest did an IPO and listed on the TSE. Tom Strike, now CanWest’s COO, corporate, says, ‘a third of the company went on the block,’ adding that ‘$1,000 invested then was worth $8,000 10 years later.’ CanWest listed on the NYSE in 1996.

CanWest’s first experience raising market capital was shortly followed by a first step into international TV. It bought 20% of TV3 New Zealand, then in receivership, and quickly staged a turnaround, led by Viner. Early in 1992, Gerry Noble, now president and CEO of Global Television, moved to New Zealand and was running TV3 within one year.

He and Viner discovered, while doing due diligence on TV3, that it had never stressed marketing. For instance, TV3 held a big party to celebrate gaining a 60% share for its broadcast of an international rugby match. Levine quotes Noble as saying, ‘They spent half a million dollars for the rights to broadcast this game…. I said to them, ‘That’s great…but what kind of revenue did you receive?’ They looked at me and said, ‘Revenue? You can’t put advertising on rugby!’…I said to myself, ‘These guys have got the business plan wrong.”

Moving on up Down Under in 1992, CanWest acquired a 57.5% economic interest in Network TEN Australia, just released from receivership. Again, the idea was to see if the Canadian-grown management strategy was exportable. It was, and by 1996, TEN completed its acquisition of Capital Television, with stations in Perth and Adelaide.

Noble says, ‘Our international experience has been fabulous. All of our experience could be applied to those markets,’ but, in addition, those markets had good ideas for Canada, such as ‘some production techniques that were new and innovative. [Also], we developed relationships with international distributors.’

And a lot of interesting marketing concepts used in New Zealand and Australia were brought home. For example, Noble says, ‘they were using virtual advertising in those countries before we were here.’

Unfortunately, one international foray, involving the La Red operation in Chile, did not work out so well. CanWest bought and sold its 50% interest within two years. CanWest did not expect that South American audiences would not like the same kinds of programming enjoyed in North America. For instance, executives involved with the Chilean outlet say sarcastic or ironic humor – such as on Frasier – is not considered funny in Chile. Also, programs made in Chile or dubbed for that market are not easy to sell to other Spanish-speaking territories, even in South America, because the dialects and the speed of speaking differ.

Also, although CanWest made the highest bid for the new Channel 5 TV licence in the U.K., CanWest was stunned, and effectively denied a major entree to the European market, when the licence went to a lower bidder.

Down East, up centre, and specialty channel #1

Back home in 1993, CanWest picked up MITV, two Irving-owned stations based in Halifax and Saint John, NB. And it stretched the reach of GTN in Ontario when the CRTC issued licences for additional rebroadcasters in Sudbury, Sault Ste. Marie, Timmins, North Bay and Fort Erie.

It was four years later that CanWest made important additions to its Canadian holdings, winning the CRTC nod to launch a province-wide network in English in Quebec through GTN (Quebec). The company completed its ‘national television system’ by signing a long-term program output deal with WIC Western International Communications covering Calgary, Edmonton, Red Deer and Lethbridge, AB, and rebranded its Canadian stations as the Global TV Network.

Also that year, CanWest launched Prime TV, its first analog specialty, aimed at the boomer generation.

New markets, new Izzy

CanWest headed for the rolling greens of Ireland that same year, leading an Irish consortium in developing TV3 Ireland, the country’s first private, national TV service, which launched in 1998. CanWest continued pumping money into foreign markets, raising its stake in TV3 New Zealand to 100%, launching TV4 New Zealand, the nation’s second private network, and taking a stake in Ulster Television, Northern Ireland.

And finally, via the acquisition of Toronto’s Fireworks Entertainment in 1998, CanWest seemed Hollywood-bound, as the prodco was destined to do big business in TV and film production as well as international distribution. Fireworks develops and produces, or partners, on a wide range of programming aimed to appeal to U.S. and international audiences. Canadian series broadcast on GTN (and other networks such as Space, Mystery and U.S. stations) include Mutant X, Andromeda, starring Kevin Sorbo, and Relic Hunter, starring Tia Carrere.

Fireworks’ 2000 purchase of the assets of Endemol International Distribution, including rights to 600 hours of TV programs, doubled the company’s program library. The added program capacity is evidently helping to boost Fireworks’ financial results – in fiscal 2001, EBITDA rose an impressive 83% to $13.6 million on revenues of $182 million.

Says Leonard Asper, Izzy’s son who is current CanWest CEO: ‘There’s no doubt, going forward, that ownership of content is the key to the future. We can take the Fireworks material, build the library, make sure Global has access to good content and allow us to launch new channels with the content itself.’

While Fireworks and the rest of the company were moving frenetically, Asper decided to slow down a bit, stepping out of the CEO’s office, becoming executive chairman, and opening the way for his son.

Big deals: 2000/02

After the CRTC approved CanWest’s $860-million purchase of the conventional TV assets of WIC, the Global Television Network stretched from Victoria to Halifax. Then came the addition of the big- and small-market newspapers to the media empire through the $3.2-billion purchase of Conrad Black’s Southam News chain and various Web portals, including canada.com, plus 50% of the National Post. Asper calls that deal the company’s ‘defining moment.’ Viner, Post publisher, says, ‘It’s all part of our convergence plan. A national paper fits very well with a national television network.’

The other major boost to convergence came when the CRTC awarded 30 digital specialty channel licences – which are interactivity-friendly – and, as a bonus, approved CanWest’s purchase of Montreal multicultural station CJNT.

In 2001, as the WIC stations, including operations in Alberta, BCTV in Vancouver and CHCH-TV Hamilton, came under CanWest control, CanWest said goodbye to hard-won Vancouver station CKVU, sold its interest in CFCF Montreal and its 50% of ROB-TV. Global also centralized administration of its specialties by pulling analog Prime, along with six new digital specialties, into its new digital broadcast centre in Winnipeg. Global owns four of the new diginets – DejaView, FOX Sports World Canada, Lone Star and XTreme Sports – and partners with TVA on Mystery and mentv.

On the broadcast network side, Global put increasing emphasis on news, launching Global National with anchor Kevin Newman, and a half-hour current affairs show, Global Sunday, out of Calgary.

In 2002, as the company moved towards July and its 25th anniversary, it acquired the remaining 50% interest in the National Post.

And what will the future hold? Business commentators worry about all the recent buying and the debt incurred now standing at $3.5 billion. With the stock market finally looking bullish after a protracted bear phase, CanWest stock needs a boost. The shares, the 52-week highs of which are in the $14.50 range, were trading at time of writing around $5.60. Asper says they’re ‘dramatically undervalued’ and will rebound, and he expects ad revenues to do likewise. As for debt, he believes it’s under control. ‘In 25 years we’ve never suffered a loss in this company. Never.’

Leonard Asper says coming out of the 2002 fiscal, ‘the worst media year in history,’ CanWest’s $552 million operating profits are up over last year. ‘And there will be much more cushion within our covenants – the requirements to maintain certain ratios between the debt and operating profits.’ He adds, ‘We are spending a lot of time with the investors, presenting our financial picture, and there’s not going to be a cash crunch.’

That said, the company has put some of its newspapers up for sale and is considering other ways to reduce debt, including the sales of its Australian and New Zealand properties. ‘We’re going to focus more on our Canadian assets. That could mean a sale of some international assets,’ Leonard says.

Still rooted firmly in Winnipeg, CanWest is currently the country’s largest creator of content via TV, newspapers and the Internet and the most profitable private ‘caster in Canada. It says its TV services reach more than 40 million English-speaking people on three continents and 94% of Canadians. The newspaper reach is huge; Canada.com, its Web portal, connects the information of the media assets in cyberspace and reportedly has a high use rate, while the customer care centres target individual preferences as closely as possible. And it all came from one near-death regional network and one TV station in Winnipeg.

In the end, one of the most telling reflections on the company’s success to date comes from matriarch Babs Asper. She says it’s always a mistake to tell her husband he can’t do something. As Asper is wont to observe, ‘All you need is more determination than the guys who are trying to stop you.’

-www.canwestglobal.com