What's in it for Hollinger and CanWest?
CanWest's blockbuster purchase of Hollinger's English language newspapers is more than just front-page news. The $3.5 billion price tag makes it the biggest deal in Canadian media history, and sets out a clear strategy for both companies.
It's also nabbing all of the Hollinger and Southam Internet properties. None of Hollinger's U.S. or international papers are included in the transaction.
Black Becomes Second Biggest CanWest Shareholder
Izzy Asper remains the biggest shareholder in CanWest, but the deal puts media baron Conrad Black's Hollinger into the number two spot, with a 15 per cent stake. The deal also hands Black a seat on CanWest's board.
It was only about three months ago that Hollinger announced it was putting some of its newspaper assets on the auction block, and announced it was open to mergers or alliances for many of its other assets.
- BACKGROUND: Hollinger announces newspaper sell off
Analysts say this deal gives Hollinger a good exit strategy, as its newspaper assets were not being given their appropriate value in the U.S. market.
CanWest Nabs Content
For CanWest, the deal enables it to cross-promote programming and advertising. For example, The National Post and Global Television will start cooperating immediately, as will various CanWest and Hollinger Internet properties.
Leonard Asper, CanWest's president and chief executive officer, said "CanWest is poised to take a leadership position in media convergence, technological revolution and interactive new-media with absolute confidence."
CanWest's Global television channel has a network of Web sites, and CanWest already has a 20 per cent stake in two U.S. based companies; LifeServ Corporation, a lifestyle Web network, and Internet Broadcasting Systems, a network of local Web sites.
CanWest says the transaction will save it between $50 million and $100 million annually.