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.

CanWest picks up 136 daily and weekly newspapers, including half of The National Post, 13 large big-city dailies, 85 trade publications and directories in the Southam Magazine and Information Group.

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.

Black had previously said that proceeds from the sale of its papers would be put to a variety of uses, from cutting back debt to buying back some its shares. He also predicted that the proceeds would bolster earnings per share and give the company a stronger strategic position in relation to new media.

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.