This article was originally published in Maclean's Magazine on August 31, 1998
Global Goes National
It was like a scene from Traders, Global TV's popular drama about life in Bay Street's fast lane. Only this time, the star of the show was Izzy Asper in the role of the shrewd and stubborn chief executive. Across a boardroom table last week, nine floors up in the Calgary headquarters of Shaw Communications Inc., Asper, the chairman of Winnipeg-based CanWest Global Communications Corp., battled it out with Shaw's top executives. For four months, the two sides had feuded bitterly over control of WIC Western International Communications Ltd. of Vancouver, a lucrative prize that CanWest has long coveted. And this time, Asper refused to let WIC slip away. Nine hours after arriving in Calgary, he and his son David had hammered out an agreement with Shaw president Jim Shaw Jr. and John Cassaday, head of broadcast operations. "I think everyone was getting tired of all the arm wrestling," says Asper. "It got to the point where it had to get done."
The $950-million deal, which finally gives CanWest a presence in Alberta with four stations, puts 65-year-old Asper closer than ever to his 19-year dream of forming a national network. In fact, the new CanWest could surpass CTV as Canada's largest private broadcaster in terms of ad revenues. And it may be about to get bigger. As the ink was drying on the agreement with Shaw, media reports emerged that CanWest is about to fork out another $900 million to buy NetStar Communications Inc., the Toronto-based owner of such specialty channels as The Sports Network and the Discovery Channel. The acquisition fits perfectly with Asper's goal of transforming CanWest into a more diversified communications company. "I've always said every company should reinvent itself every 10 years," Asper told Maclean's last week. "Otherwise, it stultifies."
For TV viewers, Global's new national status will mean more Canadian programming. For years, it has been the butt of industry criticism for failing to spend more on domestically produced shows. Some of the programs it has helped fund, such as Traders and Ready or Not, a show for teens, have won critical praise. But because it is licensed by the Canadian Radio-television and Telecommunications Commission as a broadcasting system made up of local stations, and not a formal network, Global is not required to spend as much on Canadian production. Last year, Global devoted 18 per cent of its revenue, or $67 million, to programs produced in Canada, compared with $147 million for CTV, or about 33 per cent of its revenues. The preponderance of popular American fare on Global - such shows as Seinfeld and Friends - has helped make CanWest Global the country's most profitable broadcaster, with net income last year of $141.8 million, a 39-per-cent jump from 1996. "It looks like Izzy Asper is about to be dragged kicking and screaming to do more for Canada," says Ian Morrison, a spokesman for Friends of Canadian Broadcasting, a lobby group.
But serious hurdles stand in the way of Asper's national dream. Both the WIC and NetStar deals will have to pass muster with the CRTC. A decision on the WIC deal could take up to a year. The commission could force both CanWest and Shaw to unload some of their newly acquired holdings. Under the agreement, CanWest pays Shaw $150 million in cash, takes on $300 million in WIC debt, and surrenders its 44-per-cent stake in WIC to Shaw, valued at about $500 million. In return, it gets 11 TV stations, including the four in Alberta, three in British Columbia, three in Quebec and one in Ontario. The package also includes two existing licences for specialty channels: RoB-TV, which will feature exclusively business news, and a video-on-demand channel. Shaw, meanwhile, adds WIC's 12 radio stations to the 11 it already owns. Cassaday says consolidation in the North American radio industry is boosting ad revenues for the first time in years. "Radio," he says, "was the crown jewel for us going into this."
Shaw also gains control of two specialty channels, Superchannel and Movie Max, and acquires half of the Family Channel and a 40-per-cent interest in Teletoon. But some observers question whether the CRTC will approve that part of the deal. In July, the commission barred the company from buying into a specialty channel called Sportscope over concerns that cable-TV companies could give preferential treatment to their own channels. In a speech to the Canadian Cable Television Association last spring, CRTC chairwoman Françoise Bertrand warned that the commission will intervene if cable companies abuse their power. In a worst-case scenario for Shaw, regulators could force the company to sell some or all of its specialty channels. But Shaw's Cassaday dismisses the danger, pointing out that the commission had no problem in the past approving its control of YTV, a young adults channel, or Treehouse TV, for preschoolers. "We have a vulture phenomenon here," he says. "People are hovering, hoping that we get denied so they can swoop in and pick up these assets."
The vultures are also circling over CanWest's new acquisitions. Under the WIC deal, the company would own three outlets in Vancouver, two English-language stations serving Montreal, and two in the rich southern Ontario market. To reduce that concentration, the CRTC will inevitably ask CanWest to sell off some of those stations. Jim Sward, the president of Global Television, suggested last week that the company would spurn any association with CTV, prompting observers to speculate that Global would sell such CTV affiliates as BCTV in Vancouver and CFCF in Montreal.
Asper says the creation of a Western Canada-based broadcasting empire that stretches across the country satisfies a personal challenge. "I grew up as a lawyer being told, 'You're not bad - why aren't you in Toronto.' " The son of a Belgian opera conductor and his pianist wife, the media mogul was born in Minnedosa, Man., moving to Winnipeg with his family when he was 13. He won his law degree at the University of Manitoba, practising tax law for more than a decade before entering politics in 1970 as a Liberal MLA - he eventually rose to the position of Manitoba party leader. He began building what would become CanWest Global in 1974. His three children with his wife of 32 years, Ruth (Babs), are all involved in the company.
Asper is aware that with the advent of digital TV and the proverbial 500-channel universe, conventional networks are not what they used to be. "The future broadcaster will have to have several streams of income and several strands of programming," he notes. Last May, CanWest acquired Toronto's Fireworks Entertainment Inc., a film and TV production house. In the future, the company may look to Internet firms, and more TV stations. "There are parts of the country we still have to fill in," he says. By all accounts, Izzy Asper's dreams are far from over.
Maclean's August 31, 1998