What Will CanWest Global Communications Do With Its Extra Cash?

Now that CanWest Global Communications Corp. (CWG) has called off the sale of its Australian broadcasting operation, analysts are beginning to speculate on the media company's next move, particularly because CanWest has just raised about C$350-million more than it needs to buy back the minority trust units of its newspaper operation.

Eric Mencke of UBS is predicting CanWest might use more than C$200-million to help push its planned purchase of Alliance Atlantis Communications Inc. past regulators.

Given the fighting mood demonstrated by the CRTC when it turned down CTVglobemedia's planned purchase of the Citytv network this month, the analyst suggests CanWest might need to boost its stake in Alliance Atlantis to 56% from 29% to allay foreign ownership concerns. CanWest's partner in the Alliance Atlantis deal is a private equity arm of New York investment bank Goldman Sachs.

CanWest could also use the money to privatize Score Media, a sports highlights channel in which it will acquire a 22% stake with the purchase of Alliance Atlantis, Mr. Mencke said, noting rumours that CanWest has been buying up shares in the open market. The acquisition would set CanWest back about C$150-million.

Finally, Mr, Mencke predicts that CanWest may decide to use its "excess funding" to take a minority position in BCE Inc. (BCE). CanWest could argue that taking part in one of the biggest takeovers in Canadian history makes sense because BCE would provide channels for CanWest's content: satellite TV, mobile and Internet.