By Andrew Willis
CanWest Global Communications Corp. (CWGVF.PK) won a small but significant victory in court Wednesday, rebuffing an attempt by Goldman Sachs (GS) to put a hammerlock on the media company’s specialty television networks.
CanWest got a seal of approval from an Ontario Superior Court judge for steps taken back in October to keep a tight hold on 13 specialty TV networks it co-owns with the Wall Street investment bank. Goldman went before Justice Sarah Pepall to object to changes that CanWest made to its corporate structure and the specialty TV unit, prior to the Winnipeg-based company’s move to file for creditor protection on Oct. 6.
After a hearing last week, Justice Pepall sided solidly with CanWest. In a decision released late Tuesday, she said setting aside Goldman’s protest was in the best interests of all stakeholders, as it would give CanWest “a reasonable opportunity to develop a restructuring plan.”
Among other requests, Goldman wanted the opportunity to examine many of CanWest’s senior executives and directors under oath, in its law firm’s office, a prospect Justice Pepall termed “enormously disruptive” to the restructuring.
However, this is just a preliminary skirmish in a larger battle.
CanWest’s specialty TV holdings including History Television and Showcase, and they are the company’s crown jewels, generating steady profits from subscriber fees throughout the recession. A number of rivals are interested in purchasing the division, known as CW Media, while CanWest views continued ownership as critical to its future as a restructured company.
CW Media not included in CanWest’s court-supervised restructuring. Ownership of this division was set up in 2007 as part of CanWest’s $2.3 billion acquisition of Alliance Atlantis Communications Inc. CanWest has since come to view the arrangement as a sweetheart deal for the investment bank. However, Goldman still enjoys a number of rights under the 2007 deal, including the ability to sell CW Media.
CanWest and its creditors are expected to push Goldman to re-cut the terms of that 2007 purchase, while Goldman has shown no sign of revisiting the deal on terms acceptable to the media company. The court decision on Tuesday strengthens CanWest’s hand in future talks.
There are more than 20 law firms tied up in this restructuring. Law firm Osler Hoskin & Harcourt represented CanWest in the recent hearings, while McCarthy Tetrault worked for Goldman.
