Business

Plotting a takeover

Can West Global closes in on the Griffiths family's control of WIC

JENNIFER HUNTER January 19 1998
Business

Plotting a takeover

Can West Global closes in on the Griffiths family's control of WIC

JENNIFER HUNTER January 19 1998

Plotting a takeover

Can West Global closes in on the Griffiths family's control of WIC

JENNIFER HUNTER

Business

The rumor is so delicious that Vancouver’s snoopiest gossip columnist, Malcolm Parry, couldn’t resist using it as his lead item: Emily Griffiths, matriarch of the once-influential Griffiths family, controlling shareholder of WIC Western International Communications Ltd., is poised to sell her 62-per-cent controlling interest in the media giant. Standing first in line as buyer is CanWest Global Communications Corp. of Winnipeg, which has long coveted WIC’s string of television and radio properties. ‘We believe at some point one or both of the majority voting shareholders will want to sell their shares, and if they do we want to be there,” CanWest executive vice-president Leonard Asper, son of the indomitable chairman I. H. (Izzy) Asper, told Maclean’s.

Analysts are betting that could happen before the end of the year—and the Aspers are crossing their fingers. As is their continual wont, the managers at WIC are shrugging off the tattle. “As far as I know, this is nothing more than speculation,” says Terry O’Donovan, WIC’s communications director. “Every year ahead of the AGM [annual general meeting], we’ve heard rumors like this.” But there are several factors that give new weight to the scuttlebutt: Emily Griffiths is 75 and her family’s only significant wealth is tied up in WIC shares. Last spring, she retired from WIC’s board. Her sons, Frank Jr. and Arthur, have no involvement in the management of the company. In fact, Emily Griffiths pushed Frank Jr. out of his job as WIC senior vice-president two years ago.

Arthur reluctantly ceded control of Orea Bay Sports & Entertainment, which owns the Vancouver Canucks hockey franchise and basketball’s Grizzlies, to Seattle businessman John McCaw. When the Canucks dismissed Pat Quinn as president and general manager late last year, Arthur told reporters that he found out about the firing from radio reports, and complained he now has to buy hockey and basketball tickets like every other spectator. Frank Jr.’s only involvement is on WIC’s board, where he is joined by his sister, Mary, and her husband, Klaus Priebe.

AN ALL-STAR CAST

WIC Western WIC International Communications Ltd.

Nine TV stations and 12 radio stations

Five pay TV channels

54 per cent of Canadian Satellite Communications Inc.

10 per cent of ExpressVu Inc., a direct-to-home satellite service

WIC Connexus, a wireless cable company

CanWest Global Communications Corp.

• Eight TV stations in Canada

• Australia’s Network Ten (76-per-cent equity stake,

15 per cent of voting shares)

• Two TV networks and one radio network in New Zealand

• 45 per cent of Ireland’sTV3, to be launched this fall

Meanwhile, CanWest keeps buying nonvoting shares in the company. (WIC has a two-tiered share structure; the voting shares are held by the Griffithses and the Allard family of Edmonton.) In December, CanWest boosted its non-voting ownership to 30 per cent, making it WIC’s largest nonvoting shareholder. “It’s no secret we will likely invest more in the company subject to the price,” says Leonard Asper. Because of its huge share position, CanWest will probably gain control of WIC even if Emily Grif„ fiths wants to sell her shares to another group. The reason is a “coattail” clause in ¿ WIC’s shareholder agreement that kicks in I once the majority stake in the voting shares, is transferred. The clause turns all non; S3 voting shares into voting ones and will give ; s CanWest control—Emily’s shares make up j only about five per cent of the total, even ■ though she holds the majority of voting j shares. Buying up WIC shares also gives CanWest a strong defen; sive position: no one would be able to take control of WIC without j first talking to the Aspers. Late last year, CanWest arranged $1 billion in financing and Leonard Asper acknowledges some of that money could be used to fund WIC share purchases. ‘We like to have financing available because we’re quite growth-oriented and we’re constantly looking at transactions,” he adds.

What CanWest particularly prizes about WIC are its four television stations in Alberta—where CanWest lost a CRTC bid to Manitoba’s Craig family last year—its interest in a digital satellite service, and WIC Connexus, a wireless cable company. However, CanWest isn’t alone in its WIC buying spree. Last November, Shaw Communications spent $20 million to buy a small lot of WIC non-voting shares. ‘WIC’s share price has gone up due to all the speculation,” says one analyst. “What’s left for Asper is to convince the Griffiths family that he is the right person to sell to.”

WIC’s annual meeting will be held next week in Vancouver, and even though CanWest has been denied its request for two seats on the board it will be watching closely. ‘We believe there are some clouds on the WIC horizon and we were hoping to be on the board to help solve those,” says Asper. ‘We have concerns about the performance of WIC’s radio assets, the electronic digital-delivery assets and the cellular vision company.”

If analysts are guessing right, Leonard and his dad could have their wish to be on the board very soon. In any case, the feeling on the street is that the company needs a stronger direction. “It’s a woefully managed company,” says one WIC watcher. “The high demand now for television and radio advertising is masking poor operating strategy.” One contributing factor has been the revolving door of WIC senior managers. President Doug Holtby left in 1996 and was replaced by John Lacey, who used to run Scott’s Hospitality Inc. and had no previous broadcast experience. Corporate secretary Jonathan Festingerleftto head Toronto-based Baton Broadcasting’s new VTV station in Vancouver. Chairman Edmund King, the only independent representative on the company board, recently resigned. “If Izzy gets WIC,” one analyst warns, “more heads will roll.”

Since the death of the company’s founder, Frank Griffiths Sr., almost four years ago, the efforts to wrest the company from his surviving relatives have been obstreperous, frequently played out in the B.C. Supreme Court. The first contretemps was with the Allard family, which owned a significant stake of the non-voting shares. The Allards went to court, but the Griffithses convinced them to drop the suit in exchange for voting shares. In 1995, CanWest launched a takeover bid of $24 a share, for a total of $636 million. Asper also went to court to argue that the agreement between the Allards and Griffithses should have triggered the coattail clause. The takeover bid was rejected and Asper’s court case failed on the grounds that Emily Griffiths had not ceded majority control. Two former directors of the company also went to court to try to force a sale, but last March their bid was turned down.

There are whispers about others besides the Aspers who might want to buy WIC: Vancouver billionaire Jimmy Pattison, who could certainly afford it; the Allard family; Shaw Communications; and perhaps even Baton. Asper says it isn’t clear who will emerge to challenge CanWest. “The Allards have expressed interest in the past,” he says. “Baton has merged with CTV and has its own national system. No one is certain what Shaw’s motives are and I don’t know if it has the financing capability.”

For now, watching the WIC shenanigans is almost as emotionally rewarding as following Days of Our Lives, one of the interminable soap operas shown on the CanWest Global system. Will the Griffithses, strained by family turmoil, continue to hold on? Will Emily Griffiths cash out? Will Izzy Asper get his way? Stay tuned for the next gripping episode. □