World NOTES

World NOTES

November 27 1995
World NOTES

World NOTES

November 27 1995

TYCOON OF THE TUBE

BUSINESS

PATRICIA CHISHOLM

Izzy Asper, successful tax lawyer, failed politician, onetime journalist and now emerging media mogul, has come to Ottawa on a grey November afternoon for that most Canadian of ceremonies, the annual presentation of the Order of Canada. As one who has frequently nominated others for the country’s highest honor, Asper says he feels a little strange being on the receiving end this time. “There are many others out there we don’t hear about who make important contributions,” he says. “I’m a bit humbled by it.” Amid the pageantry and popping flashbulbs in the gilt-edged ballroom of Rideau Hall, it is easy to understand his selfeffacing mood. But in the corporate boardrooms where the gravel-voiced, chain-smoking Asper usually holds court, many say there is another side to the man who may be on the verge of becoming Canada’s richest and most powerful broadcasting tycoon. “He is a friend and I love him,” says one former senior Global Television executive who now owns shares in Asper’s Winnipegbased CanWest Global Communications Corp.

“He is also the most aggressive businessman I know. The guy is a Machiavellian genius.”

Asper would probably enjoy the characterization. Now 63, he has seldom shied from the spotlight during the two decades he has spent building CanWest from one tiny Winnipeg television station into a billion-dollar media holding company with interests in Australia, New Zealand and South America. Last week, Asper upped the ante once more by offering $636 million for WIC Western International Communications Ltd., which owns eight television stations, including Vancouver-based flagship BCTV, as well as 12 radio stations and valuable interests in pay TV and satellite TV services. If the offer succeeds, Asper will finally realize his dream of building CanWest Global—already the largest private-sector television broadcaster in the country—into a third national chain alongside the CBC and the CTV Network. “He is like [Australian-born media kingpin] Rupert Murdoch in that he is a man of determination and vision,” says Peter Swain, president of Media Buying Services in Toronto, which places advertising in print and broadcast media.

“He is a clear success, even if there are a lot of broadcasters out there who like to throw stones.”

As with most of Asper’s deals over the years, the play for WIC displays an uncanny instinct for strategy. Asper has never hidden his ambition to acquire WIC, which has profitable broadcasting properties in two provinces where CanWest is notoriously weak, Alberta and, to a lesser extent, British Columbia. The proposed acquisition offers CanWest two key benefits: in one fell swoop, Asper’s company would eliminate a significant competitor while spreading programming costs over a wider national market.

Frank Griffiths, the legendary Vancouver businessman who built WIC, was always reluctant to surrender his family’s empire. But

shortly before his death in April, 1994, the ownership of WIC became mired in controversy. The company is now embroiled in a lawsuit, which, if successful, would dilute the Griffiths family’s control stake from its current 62 per cent to less than 10 per cent. That would allow a hostile bidder to seize control without purchasing the Griffiths shares. The Supreme Court of British Columbia is scheduled to begin hearing the suit on Dec. 11 in Vancouver. “We have always felt that their people and properties were most like our

_ own,” says Asper’s youngest son, Leonard,

31, who is in charge of the takeover bid. “Now is the time to act, when the ownership is in doubt.”

Financial analysts agree, but many believe that CanWest will be forced to increase its offer of $24 a share. Some say a bid closer to $28 would more accurately reflect WIC’s value. They also note that if the bid is successful, the Canadian Radio-television and Telecommunications Commission may require CanWest to sell some of its own— or WIC’s—properties in markets where they overlap, notably Vancouver and the Toronto-Hamilton area. “The CRTC normally exacts concessions on any transfer of a broadcasting licence,” notes Glen Campbell, an analyst at Bunting Warburg Inc. in Toronto.

Ultimately, the deal could have a domino effect in the industry, prompting key changes among the seven co-owners of CTV, including WIC, as well as Baton Broadcasting Inc. and CHUM Ltd., both of Toronto. Baton, for example, would almost certainly try to buy WIC’s 12.5-per-cent share of CTV. That would consolidate control of CTV in the hands of Baton, a prize it has long sought. CanWest might also want to spin off some of WIC’s other assets, such as the radio stations and pay-TV operations like Superchannel, MovieMax and 50 per cent of The Family Channel.

As if putting $636 million on the table is not enough, the senior Asper is also involved in a bid to acquire his first television station in Quebec. Later this month, the CRTC will rule on whether or not

Canada's most ambitious broadcaster launches a $636-million takeover bid

CanWest will be permitted to enter a joint venture with Télé-Métropole Inc. of Montreal to take control of CKMI, a small English-language CBC affiliate in Quebec City. CanWest hopes to use CKMI to feed its programming into Montreal, Sherbrooke and other communities where there is a sizable English-speaking audience. However, even Asper acknowledges that a recent flurry of media takeover activity in Quebec—including a bid by the owners of Montreal’s largest English-language station, CTV affiliate CFCF, to acquire control of Télé-Métropole—has become what he calls a “factor” in the CanWest bid. “I’ve been around too long to expect everything to go smoothly,” Asper told Maclean’s.

Last week’s events, while significant for the target companies, seemed like business as usual at CanWest Asper’s equanimity in the face of such high-stakes manoeuvring is no doubt due to a lifetime spent in the midst of ferocious disputes, first as a lawyer, then as a private broadcaster in a country where the right to fill the nation’s television screens is carefully supervised by government regulators. He has survived and prospered by recognizing opportunities and moving with lightning speed to capitalize on them. Soon after establishing his first station in 1975, Winnipeg’s _ CKND-TV, Asper, together with several other inz vestors, took control of the troubled Toronto£ based Global Television Network. Under the guid| anee of programming wizards such as David Mintz, the company began filling its prime-time hours with top-rated U.S. shows such as M*A *S*H and The Young and the Restless, turning Global into a perennial moneymaker. It is now the purveyor of such popular series as Seinfeld, Friends and NYPD Blue. “We believe CanWest is the largest acquirer of U.S. network series programming in the world,” says Doug Hoover, national vice-president of programming. “That’s our niche—we call it ‘appointment TV.’ People want to have a regular pattern to their lives, and we have all of the icon hits.”

In spite of those successes, there have been bumps along the way. A legal slugfest in the mid-1980s, in which Asper ousted former Global partners Paul Morton and Seymour Epstein, left bitter feelings among many Global insiders. Others express admiration for his shrewd business instincts. “Izzy is brilliant, mercurial and inspired,” says Ray Heard, a former Global vice-president of news and current affairs. “He can shave the beaver off a nickel. He’s also good to his friends and brutal with enemies—and Izzy has plenty of enemies.” Asper’s empire has also come under fire for what it airs. Critics such as the Friends of Canadian Broadcasting, a strongly nationalist advocacy group, have faulted Global for relying too heavily on American programming, and funnelling too little of its profits into original Canadian programming. Global’s earnings in the first nine months of 1995 were $74 million, up $10 million from the same period in 1994. In 1992, the CRTC rapped Global’s knuckles by renewing its broadcast licence for only four years, instead of the usual seven, and demanding that Global make sharp improvements in its Canadian content. Leonard Asper, for one, maintains that the company has done a good job of complying, with shows such as Destiny Ridge, Ready or Not and the upcoming Jake and the Kid, the latter based on stories by W. 0. Mitchell. Also in the pipeline is Traders, a primetime soap opera set on Toronto’s Bay Street and starring Street Legals Sonja Smits. “Our days of being heavily criticized by the CRTC are over,” Leonard Asper predicts.

Challenges remain, however, both on the home front and among some of CanWest’s growing collection of foreign acquisitions. Although the company has made solid profits from properties it acquired in the early 1990s in New Zealand and Australia, a 1994 foray into Chile has yet to turn a profit, partly, CanWest says, because it failed to anticipate differences between Englishand non-English-speaking markets. Most significantly, CanWest suffered what Asper calls a “huge disappointment” earlier this month after losing a three-year battle for the licence to operate Britain’s new Channel Five. Although a CanWest-led consortium easily outbid its rivals, British regulators rejected the proposal, citing concerns about programming quality. Asper adds that uneasiness over foreign ownership may also have swayed English regulators.

For now, Asper seems to be focusing his energies on what is likely to be his last major acquisition in Canada, the deal for WIC. Much is at stake: the pride of a wealthy West Coast family, a rebalancing of power among other Canadian broadcasting giants, and the fulfilment of Asper’s long-stated determination to own an unbroken string of stations in Canada’s major urban markets. He appears however, to have chosen his moment well. Last year, Edmonton’s Allard family tried to buy WIC but was rebuffed by the Griffiths family. The Allards filed suit, claiming that formal procedures for rejecting the bid were not followed. The Griffiths finally settled by selling 21 per cent of their controlling interest to the Allards for $38 a share, well above market value. That gave the Edmonton family a total of 29 per cent of the voting shares. The Griffiths also granted the Allards additional seats on WIC’s board of directors and a right of first refusal on WIC voting shares.

But that deal, in turn, sparked a lawsuit by two other minority shareholders. They contend that the sale to the Allards actually represented a change of control in WIC. The change, they allege, should have triggered a company bylaw converting WIC’s non-voting shares to voting shares. (Such bylaws, known as “coattails,” are often used to protect the rights of non-voting shareholders in a takeover battle.) If the court agrees, all of the company’s shares will have to be treated the same way, and the Griffiths’ refusal to sell will no longer present an obstacle to buyers like Asper.

Those uncertainties appeared to be far from Asper’s mind as he left the ceremonies at Rideau Hall last week. What he really wanted, he said, was a cigarette. He stopped long enough to muse about what the future might hold, for himself and for his company. “My sadness is that this deal will not be enough, because the world has shrunk,” he said. ‘To control your own destiny, it is no longer good enough to have a role in your own country.” Like many before him, Asper has found that beyond the top of the mountain, the horizon is crowded with more, even higher, peaks.

LUKE FISHER

ROSS LAVER