Shaw Communications Corp.'s proposed buyout of the bankrupt broadcaster Canwest Global Communications Corp. has all the earmarks of history repeating itself — at least for western Canadian broadcasters.

Calgary-based Shaw Communications put in a bid for bankrupt Canwest Global Communications Corp. in February. The sale must still be approved by the Ontario court overseeing Canwest's restructuring. (John Woods/Canadian Press)Similar to Canwest's Leonard Asper inheriting the business from his father, Shaw Communications is run by Jim Shaw, the scion of iconic Calgary cable mogul James Robert (J.R.) Shaw.

Just as Canwest's entry into the newspaper business in 2000 represented a shift in strategy, Shaw's proposed purchase of Canwest, which must still be approved by the Ontario court overseeing Canwest's restructuring, appeared to be a move away from Shaw's core business of subscription television and wireless communications.

But, this time around, J.R., who still has a role in the company through his position as executive chair of the board of directors, has to be hoping for a happier ending.

Canwest's past as Shaw's future?

A decade ago, Canwest founder and business legend Israel "Izzy" Asper bought the newspaper holdings — including the National Post — from Conrad Black's Hollinger Inc.

Back then, the agreement, which pushed Canwest into the print media business, was hailed as "a tremendous deal for Canwest and its shareholders," in the elder Asper's words.

Son Leonard eventually took Canwest's helm and was expected to drive his father's dream of growing the Winnipeg-based company into one of North America's communications giants in the quickly converging information technology sector.

In fact, by the second half of the decade, Canwest's weakening revenue in its television and newspaper divisions damaged its ability to service the firm's elevated debt level.

Bankruptcy followed in 2009.

Now, Jim Shaw, who is picking up an 80 per cent voting stake in Canwest for an undisclosed sum, will try his hand at building a western Canadian multi-media empire.

Shaw's strengths

At least, as Shaw Communications heads into the troubled waters of conventional broadcasting, the company's finances appear to be in decent shape.

According to a January 2010 presentation to investors, Shaw said it had 2.3 million basic subscribers, 1.7 million internet customers and 1.2 million digital cable users. That makes the company the dominant communications player in Canada's three Prairie provinces and British Columbia.

(Shaw has customers in eastern Canada but is considered to be stronger out west.)

Shaw's annual sales have achieved decent growth, reaching $3.4 billion for fiscal 2009, up from $2.2 billion in 2005.

Better still, Shaw's debt load — a factor that turned out to be Canwest's Achilles heel — has dropped, easing down to $3.1 billion in fiscal 2009, versus $3.4 billion three years earlier.

The company's reduced borrowing came even as Shaw spent an estimated $300 million buying privately owned Mountain Cablevision of Hamilton in 2009 and $190 million on wireless spectrum licences in 2008.

In addition, Shaw must repay only approximately $600 million in long-term debt by 2012, not an onerous amount given the company's revenue, analysts have said.

The love guru

Then there is Jim Shaw, Shaw Communication's 52-year-old chief executive officer and vice-chairman.

Unlike Izzy Asper's earnest son Leonard, J.R.'s offspring is cut from the same offbeat cloth as his father.

Shaw Communications CEO Jim Shaw, seen here at the company's annual meeting in January, is moving his cable firm into the conventional TV market with the Canwest purchase. (Jeff McIntosh/Canadian Press)A collector of flashy cars, Jim Shaw sometimes sports a goatee, giving him more than a passing resemblance to Danny Bonaduce, famous from the '60s television show The Partridge Family.

Dropping out of university, Jim Shaw started in his father's business digging ditches and installing customer cable hookups in the 1980s.

"Man, you're hot. You're workin' away. You've been in and out of the house 20 times, and you've been up the ladder five times trying to get the cable connected," is how Shaw described the work to a business publication in 2006.

That hands-on approach to the cable business has also given Shaw a hands-on style to managing the company's workforce in his 25-year climb up the corporate ladder.

"Just so you know how things work here, we had, like, a group hug ... yesterday, and we hugged the satellite guys, and we were hugging the cable guys, and we were hugging everybody," Jim explained to analysts in an April conference call.

Conventional broadcasting crisis

But an offbeat demeanor and cool cars might not be enough to assuage investors if Shaw runs into the same trouble as did Canwest with the conventional television business.

For months, the country's traditional broadcasters have been decrying the deterioration in Canada's conventional viewing audience, arguing that cable players should pay to carry the signals of broadcasters such as CTV, the CBC and Global.

"The crisis is real," said Peter Viner, president and CEO of Canwest Television last April before a House of Commons committee examining the future of local news. "The conventional television business model is broken, and it's been broken for some time."

Over the past few years, many conventional stations have experienced dropping viewership and advertising because of the appearance of numerous specialty channels and alternative ways of consuming electronic news and entertainment.

Complaints to the federal regulator aside, however, these broadcasters have not outlined any way of stopping the loss of viewers, experts said.

For his part, Jim Shaw did not outline any similar plan when he announced the Canwest deal.

"We believe that Shaw's investment results in a number of benefits to the broadcasting system, including an ability to strengthen local programming, ensure the ongoing viability of the second-largest conventional television network in Canada and sustain a dynamic and competitive television market," he said in a press release.

Interestingly, Shaw Communications said Canwest's television assets would remain separate on the parent company's balance statement. Such corporate segregation is often viewed as a tactic to keep a problematic subsidiary from infecting the firm's overall balance sheet.

In addition, although the purchase was not disclosed, Shaw probably did not pay too much for Canwest.

Earlier reports had the bankrupt company's bondholders seeking a cash injection of $65 million for a 20 per cent equity and 80 per cent voting stake in Canwest.

Still, ailing subsidiaries have a habit of sucking cash from the stronger divisions of a corporation, something Jim Shaw must avoid if he is to sidestep Leonard Asper's fate.