Reuters has a story about Canwest, the owner of the National Post, being on the verge of bankruptcy. It follows several similar stories in recent months, including a good one in Maclean’s by Duncan Hood that helpfully explains the different reasons for the company’s decline. One reason is mismanagement:
The bigger problem falls under the heading of “questionable acquisitions at high prices,” and the piles of borrowed money required to close those deals. Since taking over, Asper has bought up a grab bag of properties. He has launched three radio stations in the U.K., acquired four radio stations in Turkey, and bought the New Republic magazine in the U.S. Then, just a few months ago, he turned around and sold the U.K. stations for an undisclosed price, less than three years after launching them. Such flip-flops have helped contribute to a perception that management doesn’t have a long-term plan. “What can I say?” says Robert Floyd, president of R.A. Floyd Capital Management in Mississauga, Ont. “They’re not the brightest bunch of boys when it comes to buying assets.”
It turns out that Canwest is not the only television company feeling financial pain. According to a piece in The Globe and Mail, profits are down 90 percent at all the big Canadian commercial networks (Global, CTV, CITY, French-language TVA). According to the Globe, “Several factors led to the declines, including the migration of TV audiences and revenue to the Internet and to cable, and the impact of the TV writers strike last year.” In Canwest’s case, its mismanagement problem would only seem to be making a bad situation worse.