Three veterans of Canada’s media industry are taking a swing at buying a trio of major Canwest newspapers, including the flagship National Post, in a bid that could force the media conglomerate to consider selling off its assets piece by piece.
The consortium of investors, headlined by former Canadian senator Jerry Grafstein, said Monday they are only interested in picking up the Post, the Montreal Gazette and the Ottawa Citizen.
If their bid was to succeed, Canwest would have to find someone else to buy the rest of their newspaper operations, which include the Calgary Herald, Edmonton Journal, Victoria Times-Colonist and two Vancouver dailies, the Sun and Province.
Canwest has said it believes selling the assets as a whole is a better option.
Grafstein is joined in the bid by former Global TV executive and Montreal Star editor Raymond Heard and Quebec-based writer and broadcaster Beryl Wajsman.
The group said it has “received strong financial commitments” and is in the process of filing a bid to buy the three dailies. It hopes to begin its “due diligence” investigation into the papers’ operating data within the next few weeks.
“I’m a believer in the future of newspapers,” Grafstein said in a telephone interview.
“We believe that there’s a strong role for Canadian newspapers in every community. We think they should be locally owned and controlled and we have very interesting and important ideas about how to generate attention and interest on the Internet to support these newspapers.”
Canwest Global Communications Corp. (TSXV:CGS) has placed many of its media properties under protection from creditors in recent months and announced last week an auction process for buyers interested in its newspaper and television assets.
The latest bid cherry picks from Canwest’s basket of newspapers, and selects some of those with the largest circulation.
Canwest and its lenders have previously made a case for selling the newspapers as one operation and have said that a number of logical synergies exist between them, including integrated websites led by Canada.com and a relationship with the Post’s newsroom, which delivers an array of national news content to local papers.
The Winnipeg-based company’s spokesman, John Douglas, said that Canwest will give preference to any bids made for the entire publishing business, which includes all of the newspapers.
“When third parties have looked at these operations they have concluded that they’re collectively more valuable than they are as single entities,” Douglas said.
Grafstein disagreed and said that Canwest’s current operating model is not the only option for the newspapers.
“If you take a look at the history of newspapers in North America, the strongest papers are those that are rooted in each community,” he said.
“I believe it’s from the bottom up, not the top down.”
CWA Canada, the union which represents employees at five Canwest newspapers including the Citizen and Gazette, called the proposed bid heartening.
Media observer Duncan Stewart, director of research and analysis at DSam Consulting, said that the bidders might have a difficult time trying to convince Canwest and its lenders that there is a better operating model for newspapers.
“Newspaper chains are worth more when they all hang together than when they’re chopped into bits,” he said.
“There are certain costs shared by a newspaper chain and when you try spreading it across three (papers), the economics don’t work nearly as well.”