Catastrophe for Canada's largest newspaper

OTTAWA — Media giant CanWest Global Communications said on Friday that it would put its newspaper chain — Canada's largest — up for sale as part of a bankruptcy restructuring
The company's newspapers are the dominant dailies in several large Canadian cities, including Calgary, Edmonton, Montreal, Ottawa and Vancouver. CanWest, a broadcaster that became heavily indebted by its move into publishing as well as a deal to acquire several of Canada's leading cable channels, put many of its broadcasting assets under court protection in October.

While the Asper family, which founded and controlled CanWest, is trying to maintain control of its television business, Friday's filing will apparently bring an end to its role as the country's leading publisher.

CanWest said that if no buyer was immediately found for the newspapers, they would be sold to the secured lender. They would effectively acquire the newspapers by exchanging the debt they carry for equity. That group, however, is dominated by Canada's five largest banks. Both business and political reasons suggested that the banks would not be keen to control the country's newspaper business for an extended period.

While Canadian newspapers have been hurt by the rise of the Internet, its impact has not been as severe in Canada as in the United States. Most of CanWest's newspapers are believed to be solidly profitable on an operating basis. The National Post, the money-losing Toronto-based newspaper, was not included in the bankruptcy filing, but lenders intend to purchase it along with the others.

There are no obvious buyers yet, and Canadian tax laws prevent a sale to foreign companies.

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