Wednesday, October 22, 2008

Canwest: $1.10 ... oops, 99 cents, um, 95 cents

Update: It fell through a buck today. The Aspers must do something if it stays below a buck, either pull a Nortel and make a 10 to 1 swap or do a company share buyback. The latter is very unlikely, since they have no money. But if something doesn't happen, the stock could eventually be forced off the main exchange and on to the over-the-counter market.
The company is supposed to post results at the end of this month, so that may be the time of some sort of action.
Reuters moved a story on Canwest's share decline today.
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This is sad, and I hope there's no impact on the people who work for Canwest. And there shouldn't be. We're talking about, over-all, the best newspaper properties in Canada and a pretty good regional TV network. This is a question of leveraging, the belief the company carries far too much debt. There also seems to be little market enthusiasm for David and Leonard Asper.
Yesterday, a Canwest manager who I respect quite a lot reminded me about the many good people who work for Canwest, decent journalists who just want to raise families, pay mortgages and be proud of their work. I hope every one of them comes through this OK.
We are on the edge of history, probably just a few weeks or months away from more economic events that none of us thought we would ever see. We're already in the middle of the worst banking crisis since 1933 and layoffs have started in the economy. John Budden, a pretty shrewd investment specialist in Ottawa, noted on CFRA yesterday that ship owners have cut their rates by 80% on the big ships that use the Cape Horn route from Asia to Europe and America. That means nothing is moving.
The Financial Post carried a story today about the collapse of palladium, down to one-sixth of what it was worth a year ago. It happened because the speculators have been toasted and the car industry, which uses the stuff, has simply seized up.
Getting back to Canwest. I think it's a steal at $1.10. I think anyone with a few thousand dollars they can afford to play with should buy some of it. The market says the company has almost no equity value. But the market has been wrong before.

9 comments:

Jon Kupitsky said...

That Canwest manager is a smart guy!

Anonymous said...

Some big drops coming in real estate in Ontario too.
A friend took a drive through your own stomping grounds near Collingwood. All kinds of weekend country properties, most built during the last boom, up for sale.
Wonder how many of these people who took lines of credit against their Toronto homes to play the stock market and buy second recreational homes have been burned.
I hear about banks cutting back seriously on lines of credit too.

Ottawa Watch said...

The Canwest guy is not just a skilled manager, s/he's a bridge builder.

And about Collingwood real estate: in 1992, which was not much of a downturn, there was a big billboard at Stayner offering unsold condos at a Craigleith development for "two for one".

Anonymous said...

We're talking about, over-all, the best newspaper properties in Canada and a pretty good regional TV network.

Absolute nonsense. Well, "best" is of course relative, so maybe you're right, but I think the entire World is realising just what happens now when value is confused with price.

The decline of print journalism is not going to be halted with any creative accounting...in fact, Canada would be much better served with far fewer newspapers that represent journalistic excellence, rather than this mess of unappealing advertising-delivery mechanisms. And the less said about Global teevee and CanWest's 3 million internet sites, the better.

Burn, baby, burn.

Ottawa Watch said...

Right.You think Canada would be so much better off if the newspapers in Vancouver, Calgary, Ottawa, Montreal and many other Canadian cities simply did not exist. You think democracy would be improved, that city halls would be better monitored, that the public's interest would be better served by... what? Bloggers? Do you avctually believe bloggers contribute anything of note to Canadian journalism? And do you have the mental capacity to imagine what bloggers would have to work with if they had no newspapers to link to or to rob for ideas?

Anonymous said...

Believe you me, I'll be the last to suggest blogging, as it mostly exist, are any replacement for proper investigative reporting and journalistic good practice. However, a new business model arising from bloggers like Josh Marshall at Talking Points Memo (which recently won a Peabody) and bloggers who live blog events is much preferable to resources continuing to be wasted by local papers no one bothers to read anymore anyway and over which editorial control is revealing itself to be far less concerned with the public interest then we'd like to believe.

The sooner these media conglomerates disappear and can no longer distract us, the clearer idea we might have about where journalism is headed and where capital is best invested.

Ottawa Watch said...

Whose capital? Show me the Internet news model that makes any money, especially one that covers municipal and provincial news. Kate McMillan at smalldeadanimals runs the most popular blog in the country and doesn't make a living at it.

Anonymous said...

Whose capital?

Wise investors.

Anonymous said...

You don't think that Canwest, as a monopoly, isn't biased? Duh, I think it's biased. It serves big business. Further, Canwest's TV programming is shite. Just take a look at the schedules. No decent movies - all less than 3 stars and never any academy award winners. No foreign or thought-provoking films or programs of any kind. Just shite. Shite for the masses, written for the most common denominator. Canwest's TV programming is an insult to Canadians. Period. Who wants to watch back-to-back shows based on the so-called day-to-day lives of television and movie stars? No British movies, no documentaries whatsoever. It's just plain BAD entertainment - the worst - and it should be illegal.