Monday, June 16, 2008

Blame the Internet...

About a month ago, when Canwest went below $4 a share, I wondered how the bankers felt. Then I stuck my tongue in my cheek and wondered when it would break through the $3.50 barrier on its way down. Really, I thought, this stock must be at the bottom at $4. After all, it used to be a serious stock, worth over $10 a year ago and upwards of $20 three years ago. The company owns just about every major newspaper outside of Toronto and a whack of small and mid-sized city TV stations, plus some interesting foreign properties and some magazines. Old Roy Thomson would have looked at this company and broken into full mouth foam.
Well, today was the day.
Yes, newspapers are having troubles, but this is more than just new media jitters. This company is getting a vote of no-confidence from Bay Street. There have been value investors buying Canwest all the way down, but there have also been capitulation trades when funds and stockholders have unloaded hundreds of thousands of shares as the stock hit 52-week lows. Obviously, they believed this company would not turn around in the near or mid-term and sold for what they could get.
This stock is trading at 2/3 book value. That's almost unheard of.
OK. Here's my free advice.
Split the TV network from the newspapers.
Sell the newspapers.
Keep the TV network.
Keep the Asper brothers away from whatever company runs the papers.
They have no fucking clue about how to run a newspaper. Hence $3.50.
Make sure the company that buys the papers runs them as free-standing enterprises.
Beg CP to take you back.
Focus the papers on local news by hiring good reporters and getting them out on the street breaking stories. I've been in Canwest newspapers and all the reporters are working the phone. That's not how you get great stories. Spend much more on sports analysis, especially those sports that are on Pro-Line.
Kill the national Canwest news and feature-sharing system. It makes the chain look cheap, the copy is substandard, and the convergence structure really hasn't worked. David Akin, though a good reporter, does not convergence make.
Ditch most of the national political news.
Ditch the lifestyle news.
Lose the celebrity news.
Lose "soft" features.
Drop anything that can be found for free on the net.
Keep career and real estate sections. Focus on stories in these sections that tell people how to invest. Ditch the stuff that doesn't make that cut.
Strip the web pages down. They don't make any money.
There you go.
If you're looking for someone to work in the new newspaper company, don't call me. Hire Derek Finkle.

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