The newspaper assets of Canwest Global Communications are looking more attractive to potential buyers on the heels of surprisingly strong earnings from media giant Torstar Corp., one of the companies widely considered a potential bidder for the dailies.
Interested buyers had until midnight Friday to express interest in buying the papers–which include National Post, the Vancouver Sun, Montreal Gazette and Ottawa Citizen–part of a larger sale process that will likely continue throughout the spring.
According to industry analyst Duncan Stewart, Torstar’s strong fourth-quarter profit announced last week carries a broader significance for the Canadian newspaper industry and will ultimately help Canwest’s operations look more viable.
"Everybody knows you can probably buy these assets for a relatively good price today, and count on things getting better,” he said.
The goal for Canwest’s senior secured lenders, the Canadian banks, is to drive up enough interest in the newspaper division to drive the bids above a $925-million starting price. Analysts and observers have suggested the batch of papers could fetch more than $1 billion.
Canwest’s TV stations have already been sold in a separate deal to Shaw Communications Inc., the big Calgary cable and satellite TV operator.
Torstar earnings stole the spotlight Wednesday as the company turned around its losses, and gave further weight to reports it could make a move to grab Canwest’s papers.
The Toronto-based company reported a solid $57.4-million profit in the fourth quarter, reversing a big year-earlier loss, as the newspaper, book and Internet publisher weathered a turbulent economy and benefited from earlier cost cutting.
"Things have turned around at the Star and although they aren’t where they were three or four years ago, they are a lot better than they were three or four months ago,” said Stewart, director of research and analysis at DSam Consulting.
"That was primarily due to a little bit of recovery and an awful lot of cost cutting. And of course, there’s a limit to how long you can keep doing that.”
Torstar hasn’t publicly expressed an interest in bidding on Canwest’s papers though chief executive David Holland has never officially ruled it out.
On Friday, he declined to discuss the company’s interest in Canwest, or whether a bid was going to be made.
"I’m not in a position to comment on that,” he said.
Holland, however, noted that Torstar is focused on tuck-in acquisitions for its digital media assets, which include the Toronto Star website, Wheels.ca and Workopolis.
Canwest would potentially offer a broader range of websites, including its Canada.com newspaper homebase, Working.com and Driving.ca.
