3100 Toronto Dominion Center
201 Portage Avenue
Winnipeg, Manitoba R3B 3L7
Telephone: (204) 956-2025
Fax: (204) 947-9841
Incorporated: 1973 as CanWest Capital Corporation
Sales: C$882 million (1999)
Stock Exchanges: New York Toronto
Ticker Symbol: CWG
NAIC: 512110 Motion Picture and Video Production; 512120 Motion Picture & Video Distribution; 513112 Radio Stations; 513120 Television Broadcasting; 513210 Cable Networks
With respect to our corporate development, we continue to seek ways to expand our television presence in the U.S., the U.K., and Western Europe. The latter is a new twist in our strategy, but we believe there are significant growth opportunities in this group of markets. If we are to grow as a company, we must not only seek a presence in established markets but also markets that are less developed.
1974: CanWest is licensed as a new independent television station in Winnipeg, Manitoba.
1984: CanWest obtains new licenses for start-up TV stations in Regina and Saskatoon.
1987: Company gains control of CKVU-TV in Vancouver, British Columbia.
1991: CanWest has a successful initial public offering on the Toronto Stock Exchange.
1995: CanWest attempts its first takeover of WIC Western International Communications.
1998: CanWest acquires Fireworks Entertainment Inc. and forms CanWest Entertainment.
1999: CanWest establishes international film distribution arm, Seven Arts International.
1999: CanWest launches its Interactive Media division.
CanWest Global Communications Corporation is Canada's largest private sector television broadcaster. Although it owns several television stations throughout Canada, it has been frustrated several times in its attempt to build a third Canadian network to compete with the government-owned CBC and CTV, Canada's publicly owned consortium of private stations. The company also has an ownership interest in and runs television stations in Australia, New Zealand, the Republic of Ireland, Northern Ireland, and Chile. It is interested in expanding into the United States, United Kingdom, and Western Europe television markets. Its CanWest Entertainment division controls the company's film and television production and distribution subsidiaries.
A Single Television Station in Winnipeg in the 1970s
CanWest Capital Corporation, the forerunner of CanWest Global Communications Corporation, was founded by Israel ('Izzy') H. Asper, a prominent Canadian tax and corporate lawyer, author, business person, and former political leader. Asper had studied law at the University of Manitoba and practiced law for 13 years before becoming the leader of the Manitoba Liberal party from 1970 to 1975. He formed CanWest Capital Corporation in the early 1970s as a holding company for his business interests.
The CanWest story began in 1974 when the Canadian Radio-Television and Telecommunications Commission (CRTC) approved the company's license application to establish a new independent television station in Winnipeg, Manitoba. Asper and a group of investors then bought KCND-TV, located across the border in North Dakota, and transported the station's equipment back to Winnipeg where they reassembled it in a converted Safeway supermarket. The station, CKND-TV, became active in fall 1975 and was Winnipeg's third television station.
More Stations in the 1980s
Following the launch of CKND-TV, CanWest turned its attention to Toronto, where the recently licensed Global Television Network was having financial difficulties. Global provided programming for CKND-TV, so CanWest had an interest in its survival. Asper saved the near-bankrupt Global by organizing an emergency rescue. Through conservative management and operating strategies, Global became financially sound. By 1989 CanWest had acquired full ownership of Global.
In 1984 CanWest obtained new licenses for start-up television stations in Regina and Saskatoon, which it operated through a newly formed subsidiary, SaskWest Television Inc. In 1987 CanWest gained control of CKVU-TV in Vancouver, British Columbia.
CanWest turned the Global Television Network into a profitable venture by importing popular American shows such as M*A*S*H and The Young and the Restless. In the 1990s it carried such popular series as Seinfeld, Friends, and NYPD Blue. Critics such as the Friends of Canadian Broadcasting, though, complained that Global relied too heavily on American programming at the expense of original Canadian programming. In 1992 the CRTC renewed Global's license for only four years, rather than the usual seven, and required Global to make improvements in its Canadian content.
A Public Company in the 1990s
In 1991 CanWest had a successful initial public offering (IPO) on the Toronto Stock Exchange. Between 1991 and 1995 CanWest quickly grew into a world-class communications company by acquiring broadcast properties around the world. Its strategy was to buy up cheap, poorly run television networks and make them profitable.
The company made its first international expansion by acquiring an interest in TV3 New Zealand. TV3 was losing money at the time, but in its first year under CanWest management it turned a small profit.
Subsequent international growth included the acquisition of an interest in Australia's Network Ten, which owned stations in Sydney, Melbourne, and Brisbane. It, too, was losing money, but CanWest was able to turn the station around and generate substantial operating profits. In fiscal 1994 Network Ten contributed 64 percent of CanWest's consolidated profits. CanWest also took full ownership of TV3 New Zealand and then launched TV4 New Zealand. In 1998 it launched TV3 Ireland, the Republic of Ireland's first private, over-the-air television network. CanWest also acquired a 30 percent interest in Ulster Television in 1998.
In 1994 CanWest held a 24.5 interest in a new commercial radio station for the United Kingdom. Called 'Talk Radio U.K.,' the owners received permission to launch the station in mid-1994. It would be Britain's third national commercial radio station.
In its first Latin American venture, CanWest acquired 49 percent of the Chilean television station La Red for C$11 million in 1994. La Red was one of five stations broadcasting in Chile. Determined to make La Red the top television station in Chile, CanWest invested heavily in soccer programming and brought in several high-profile personalities. It also brought in several North American shows, but soon found that Chileans preferred locally produced television programs to imported shows dubbed in Spanish. CanWest also cut personnel at La Red from 300 to 174 and made several executive changes. During the first year La Red's audience market share increased from 5.7 percent to 7.9 percent, and CanWest expected further growth in advertising revenues from La Red. For fiscal 1994 ending in August CanWest had C$202 million in revenues and C$32.5 million net income.
In 1995 England's Independent Television Commission (ITC) took bids for analog TV frequency Channel 5, and CanWest submitted the highest bid of US $57.9 million. It was competing against two British-led consortia and Rupert Murdoch's BSkyBled New Century Television, which submitted the lowest bid. At the end of the year, however, British regulators rejected CanWest's bid for Channel 5, citing concerns about programming quality, and awarded the license to a British-led consortium.
By 1995 CanWest had emerged as a powerful new force in Canadian broadcasting. It was the largest private sector television broadcaster in the country, reaching 73 percent of Canada's English-speaking populace and garnering 16.5 percent of audience share. Its market capitalization exceeded C$1 billion for the first time in 1995. Through a series of acquisitions, it was in the process of building a national network in mainland Canada. It also had interests in television networks in New Zealand, Australia, and Chile. It hoped to use its experience as part of a talk-radio consortium in the United Kingdom to enter that country's undeveloped and lucrative private television market. Asper told Canadian Business in 1995, 'We have to be affiliated or connected to or own broadcast outlets in the broadest possible geographical territory.' Asper also hoped to enter the United States television market. In 1995 Asper received the Order of Canada, the country's highest honor.
In 1995 CanWest launched a takeover bid of C$24 a share for Western International Communications (WIC), which owned eight television stations, 12 radio stations, and interests in cable and satellite TV services. The acquisition would make real Asper's goal of creating a third national television network in Canada in addition to the government-owned CBC Network and the privately owned CTV Network. At the time WIC was embroiled in a lawsuit following the death in April 1994 of its founder, Frank Griffiths, that would dilute the Griffiths family's controlling interest in WIC from 62 percent to less than ten percent.
In January 1996 the British Columbia Supreme Court upheld the Griffiths family's controlling position in WIC. As a result, CanWest said it would reconsider its takeover bid. CanWest subsequently announced plans to launch stations in Edmonton, Calgary, Victoria, and Quebec City. In December the CRTC rejected CanWest's application for the last remaining Calgary-Edmonton TV license and awarded it to Craig Broadcasting of Brandon, Manitoba. The rejection made it impossible for CanWest to complete the national network it was trying to build, at least for the time being. As a symbol of its growth, CanWest shares began trading on the New York Stock Exchange in June 1996.
In March 1997 the CRTC approved CanWest's application to take over Quebec City station CKMI-TV, a CBC affiliate. CanWest planned to broadcast English-language programming to Montreal from the station. With its planned takeover of WIC thwarted, CanWest increased its holdings of nonvoting WIC shares from 9.7 percent to 15 percent. CanWest hoped that its increased stake in the company--even though nonvoting--would give it some influence in the company's affairs and future direction. By December 1997 it had increased its holdings to 30 percent, making CanWest the largest nonvoting shareholder in WIC.
By early 1998 rumors indicated that Emily Griffiths, matriarch of the Griffiths family, was willing to sell her 62 percent controlling interest in WIC. Analysts noted that CanWest would probably gain control of WIC, even if she were to sell to another buyer. That was because WIC had a 'poison pill' clause in its shareholder agreement that would turn all nonvoting shares into voting shares once the majority stake in the voting shares was transferred.
On March 14, 1998, Emily Griffiths sold her WIC voting stock for C$91 million to two buyers, Shaw Communications Inc. of Calgary and the Allard family of Edmonton. CanWest responded by announcing that it had increased its holdings of WIC nonvoting stock to 35 percent and offered to buy all remaining WIC stock of either class for C$650 million. It was CanWest's goal to win a ruling from the CRTC to trigger WIC's shareholder clause that would transform nonvoting shares into voting shares, thus giving CanWest control of WIC.
Immediately three provincial securities regulators began investigating WIC's new poison pill clause, which would make additional nonvoting shares available at half-price to investors who already owned the stock if CanWest increased its position in WIC. The poison pill clause was adopted by WIC's board in an attempt to foil CanWest's hostile takeover bid. In short order the regulators struck down the new poison pill provision, thus allowing CanWest to buy a majority of WIC's nonvoting shares. Shaw Communications responded by offering C$975 million in cash and stock, or C$43.50 a share, for WIC's remaining nonvoting stock, compared with CanWest's bid of C$39 a share. CanWest quickly matched Shaw's offer of C$43.50 a share, but it would require an Ontario court to overturn a previous deal between WIC and Shaw.
In August 1998 CanWest and Shaw Communications reached an agreement that gave CanWest control of WIC for C$950 million. The agreement would have to be approved by the CRTC, however, which could take a year or more. Under the terms of the agreement, CanWest would pay Shaw C$150 million in cash, take on C$300 million in WIC debt, and give up its 44 percent stake in WIC to Shaw, which was valued at about C$500 million. In return, CanWest gained 11 television stations, including four in Alberta, three in British Columbia, three in Quebec, and one in Ontario. CanWest also would obtain two existing licenses for specialty channels RoB-TV, which featured business news and a video-on-demand channel. Shaw would get WIC's 12 radio stations and control of two specialty TV channels, Superchannel and Movie Max, half of the Family Channel, and a 40 percent interest in Teletoon. In September 1999 the CRTC ordered public hearings to begin in October on the case. By mid-2000 CanWest was still awaiting CRTC approval to assume control of WIC's nine television stations.
At the same time CanWest was considering spending another C$900 million to acquire NetStar Communications Inc. of Toronto, which owned cable channels The Sports Network, the Discovery Channel, and others in Canada. ESPN Inc. owned a one-third interest in NetStar. Toward the end of 1998 CanWest put its bid for NetStar on hold, citing differences with ESPN. In February 1999 CanWest announced that it would acquire a 68 percent interest in NetStar in a deal estimated to cost C$875 million, with ESPN keeping its 32 percent. ESPN had the option of tendering its shares or selling them to another buyer. Then, at the last minute, rival CTV, a widely held public consortium of privately owned Canadian television stations and Canada's second network, stepped in and signed a deal for the 68 percent of NetStar for which CanWest was negotiating. In March 2000 the CRTC approved CTV's application for control of NetStar.
Meanwhile, CanWest founder Israel Asper was taking steps to ensure an orderly management succession at the company. In July 1997 he relinquished his post of CEO and president to Peter Viner, who was the CEO of Australia's Network Ten. Asper took on the new title of executive chairman. His son, Leonard Asper, was CanWest's executive vice-president. The next month the Australian Broadcasting Authority ordered CanWest to reduce its stake in Network Ten to 15 percent, the maximum allowed to foreign owners. At the time CanWest effectively controlled 76 percent of Network Ten, according to an Australian court ruling. For fiscal 1997 ending August 31 CanWest reported net income of C$142 million on combined revenues of C$835 million. In October 1997 the company launched its cable network in Canada, Prime TV.
Production, Distribution, and the Internet: 1998-2000
In 1998 CanWest began getting involved in film and television production and distribution. It entered the production side of television and film through the acquisition of Fireworks Entertainment Inc., a leading Canadian independent film and television production company. CanWest was the first Canadian broadcaster to become involved in film and television production. It formed the CanWest Entertainment division for its film and television production and distribution interests. In 1999 CanWest Entertainment opened an international distribution office in London, England.
In August 1999 CanWest bought a 20 percent stake in Alliance Atlantis Communications, Canada's largest film and television company, for more than C$13 million. The acquisition gave CanWest a base from which to expand its programming holdings. Alliance had ownership interests in six Canadian channels and was a leading producer and distributor of television programming. In 1999 CanWest also created its international film distribution arm, Seven Arts International.
CanWest launched its Interactive Media division in 1999 by acquiring 20 percent of two U.S.-based Internet content providers: Internet Broadcasting Systems (IBS), the leading developer of local news-based web sites for television stations, and LifeServ, a community-focused Internet provider of content relating to planning weddings, births, and careers. CanWest planned to launch eight web sites related to Global Television in 2000 in association with IBS. CanWest's overall Internet strategy called for developing a number of content sites that would generate e-commerce and advertising revenues.
The planned management succession strategy came to fulfillment in September 1999 when Leonard Asper became president and CEO, replacing past president and CEO Peter Viner, who became vice-chairman.
A Diversified Media Company for the 21st Century
As of mid-2000 CanWest was still awaiting approval of the WIC transaction, which was tying up a C$383 million investment that the company wanted to transform into a productive, cash-generating asset. CanWest planned to continue to find ways to expand its television presence in the United States, the United Kingdom, and Western Europe. It expected moderate growth from its operations in Canada and Australia and expected that TV3 in Ireland would become profitable by 2001.
CanWest had high expectations for its Internet strategy, which president and CEO Leonard Asper called 'an area of significant future growth for CanWest' in his 1999 Report to Shareholders. The company believed that it was in a strong position to generate e-commerce sales through its ability to attract major retailers to partner with it, and its television marketing power put CanWest in a unique position to generate more advertising on its web sites than its competitors.
Principal Subsidiaries: CanVideo Television Sales; Global Prime TV; Global Ontario; Global Vancouver; Global Quebec; Global Regina; Global Halifax; Global Saskatoon; Global Saint John; Global Winnipeg; TV3 New Zealand; TV4 New Zealand; TV3 Ireland; Ulster TV; More FM (New Zealand); Network TEN (Australia); Internet Broadcasting Systems (20%); Lifeserv Corporation (20%); Fireworks Entertainment; Seven Arts International; CanWest Entertainment International; WIC Western International Communications.
Principal Divisions: Global Television Network; CanWest International; CanWest Entertainment; CanWest Interactive.
Principal Competitors: Baton Broadcasting Corp. (Canada); Shaw Communications Inc. (Canada); CTV (Canada).
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------, 'Feeling Oppressed? Call Izzy,' Canadian Business, April 24, 1998, p. 48.
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'Crushing a Poison Pill,' Maclean's, April 20, 1998, p. 35.
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'Global Domination: Izzy Asper May Soon Have His National Network,' Maclean's, August 31, 1998, p. 56.
Hunter, Jennifer, 'Plotting a Takeover: CanWest Global Closes in on Griffiths Family's Control of WIC,' Maclean's, January 19, 1998, p. 46.
Mandel-Campbell, Andrea, 'Television South American-Style,' Manitoba Business, May 1995, p. 30.
Miles, Laureen, 'Phone Lines Open,' Adweek Eastern Edition, June 13, 1994, p. 16.
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'The Rise of a TV Empire,' Maclean's, February 1, 1999, p. 60.
Tillson, Tamsen, 'Webs Tangle for Dominance,' Variety, April 3, 2000, p. 156.
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------, 'Why a Network?,' Maclean's, February 19, 1996, p. 46.
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Source: International Directory of Company Histories, Vol. 35. St. James Press, 2001.