Canwest Global Communications Corp. said Thursday it lost $1.4 billion in the second quarter and announced it was writing off more than half its publishing assets because of a tough economy.

Canwest, which owns the Global television network and the National Post newspaper, lost $8.09 a share for the three months ended Feb. 28. That compared with a loss of $33.9 million, or 19 cents a share, for the same time frame a year earlier.

Lower advertising revenues and other problems associated with a weak economy forced the company to record a $1.19 billion writedown in the value of goodwill, assets, property, and equipment, mostly related to publishing operations.

Still, Canwest has media properties that dominate the Canadian markets and the conglomerate has the only digital sports station in Australia.

"We feel we're well-positioned when the economy comes back," said Leonard Asper, Canwest's president and chief executive officer and son of the late company founder Israel Asper.

Overall, revenue slid marginally by three per cent to $1.52 billion for the first six months of the latest fiscal year from $1.567 billion a year earlier.

To help cope with the economic downturn, Canwest has cut 481 jobs in the second quarter and reduced costs in the range of $100 million with other savings likely in future quarters, Asper said.

Once these non-cash restructuring charges were eliminated from earnings, Canwest managed to eke out a profit of $75 million, down a third compared with continuing earnings of $109 million for the same period a year earlier.

Crumbling newspaper values

A major portion of Canwest's writeoffs related to the company's holdings in the National Post and the stable of newspapers in the former Southam newspaper chain.

The newspaper company, which spent the 1990s accumulating newspapers in Canada and the United States, has seen classified advertising revenue fall precipitously, led by a 49 per cent drop in employment ads, a 37 per cent decline in real estate ads, and a 45 per cent fall in car ads.

An overall year-to-date decline in publishing revenue of 16 per cent combined with a 25 per cent rise in newsprint prices chopped the value of these print assets.

"It's been the most affected business of our (group)," Asper told analysts on a conference call.

In the most recent quarter, Canwest cut the goodwill associated with its newspaper assets to the tune of $895 million. That means the value of the newspapers shrank to $788.1 million, down from $1.697 billion at the same time last year.

(Goodwill is commonly defined as the difference between an asset's purchase price and what the company is carrying it for on the balance sheet.)

The Winnipeg-based media empire has also suffered from a drop in advertising at its electronic broadcast properties.

Debt troubles

But Canwest said the asset valuation cut will not affect the company's prospects for survival.

"All are non-cash charges to income that do not affect Canwest's liquidity, cash flow from operating activities, debt covenants or have any impact on future operations," Canwest said in a press statement.

Three-month stock chart for Canwest Global Communications Inc.

However Canwest continues to groan under a $4 billion debt load, of which more than $1 billion is due by 2012.

The company has already missed interest payments on a $112 million outstanding credit facility and $1 billion of subordinated debt notes.

In April, Canwest received a necessary two-week extension on covering its interest obligations so the company can try to reach some deal with its lenders.

Under the current circumstances, the creditors can demand repayment of their holdings, a move that would likely drive Canwest into bankruptcy protection.

For its part, Canwest said it needs to reduce its outstanding debts but has limited access to further liquidity.

The company has already sold the New Republic magazine to a group of American investors and its stake in the Score sports station and is considering the sale of five conventional television outlets, including ones in Hamilton, Red Deer, Alta., Victoria, Kelowna, B.C., and Montreal.