The encyclopedia · Strategy & Leadership · Strategic decision · 1974–2013
Canwest built Canada's largest media empire on debt — $4B collapsed it
A family-built media conglomerate owning the National Post, Global TV, and Southam newspapers filed for creditor protection with $4 billion in debt.
Canwest
What happened
Canwest was founded in 1974 by Israel Asper, a lawyer and politician who built a single Winnipeg television station into Canada's largest media conglomerate. Over 35 years, Canwest acquired the Global Television Network, the Southam newspaper chain (including the Ottawa Citizen, Vancouver Sun, Calgary Herald, Montreal Gazette, and Edmonton Journal), and founded the National Post. It also acquired premium specialty channels through the $2.3 billion purchase of Alliance Atlantis in 2007.
The acquisitions were financed almost entirely with debt. By 2007, Canwest's bonds had been downgraded to junk status. The company was paying high interest on approximately $4 billion in debt while its newspaper and broadcasting revenues — already under structural pressure from the internet — were about to be hit by the 2008–2009 recession. In fiscal 2009, Canwest reported a net loss of $1.689 billion.
On October 6, 2009, Canwest filed for creditor protection under the Companies' Creditors Arrangement Act (CCAA). The Asper family, which had controlled the company since its founding, was left with 2.3% of the restructured entity. The broadcasting assets were sold to Shaw Communications and reorganized as Shaw Media (later subsumed by Corus Entertainment in 2016). The newspaper assets were transferred to a creditor group that formed Postmedia Network, which survives today as one of Canada's largest newspaper publishers burdened with its own legacy of that debt.
The empty corporate shell — renamed 2737469 Canada Inc. — underwent bankruptcy proceedings under the Bankruptcy and Insolvency Act and was formally dissolved on May 27, 2013.
Why it happened
- Canwest borrowed heavily to acquire Southam ($3.2B in 2000) and Alliance Atlantis ($2.3B in 2007), loading the company with interest payments it could only service if revenues kept growing.
- The Great Recession hit advertising revenue at the moment debt costs were highest, creating a cash-flow gap no cost cut could bridge.
- Newspaper and TV advertising were already in structural decline from the internet — Canwest borrowed to buy assets whose revenue streams were shrinking.
- The Asper family's controlling stake prevented asset sales or restructuring until the debt was already terminal.
The lesson
A media empire built on debt can withstand one shock. Canwest had three — recession, structural decline, and a failed acquisition — and $4B of leverage made them fatal.
Aftermath
Canwest's broadcasting assets (Global Television, specialty channels) were sold to Shaw Communications, forming Shaw Media. The newspaper assets became Postmedia Network. The corporate shell was renamed 2737469 Canada Inc. and dissolved on May 27, 2013. The Asper family, which had founded and controlled the company for 35 years, was left with 2.3% of the restructured entity. Canwest's collapse remains the largest media bankruptcy in Canadian history.
Sources
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