Thursday, October 16, 2008

When nothing makes sense

I've patted my self on the back many times for pegging Canwest as a dog company with nowhere to go but down. I first started following it about six months ago, when I did a little research on how Canadian media convergence plays were doing. At that time, it had lost about half its value on the year and was down to about 1/4 its 3-year high. So my answer was: "not very well."
Why did I care? I teach journalism and media analysis to kids who want to work in media. Academics and media executives have been pushing convergence as the future of media. If it was the future, I thought, companies like Canwest that are well along in the process should be doing well. They should be making money, and that should be reflected in the value of their equities.
In Canada, where four media companies -- Canwest, BellGlobemedia, Quebecor and TorStar, control almost all of the media -- the results should be easy to see. Convergence of the country's blue-chip print media properties in English Canada outside Toronto, along with a major television network, and with Internet properties like Canada.com should make money, if convergence is a model that works.
But convergence doesn't seem to work. The papers are no better than they were. The TV network picks up some material from the papers, but they always could, through Canadian Press. Canada.com is not a busy web portal. Instead, "convergence" simply turned out to be a model for cost-cutting, with none of the savings plowed back into journalism. The money has been used for more leveraged buy-outs. It's the same in every Canadian convergence play.
And this is the result: Canwest has already fallen through $1.30.
On my most sceptical day, I would never have believed it. Six months ago, if someone offered me this stock at $1.30, I would have sold everything I had to buy as much as I could. This stock may be undervalued, but now I wouldn't touch it. The market these days is about de-leveraging. It sees Canwest as over-leveraged. And it's predicting the holders of Canwest stock will get little or nothing when the wheels come off the company.
So much for convergence. In my wildest dreams, I hope the newspapers get sold to a deep-pocketed company that understands print media.

4 comments:

Anonymous said...

To someone that has worked in the media and observed how sales departments really work, Canwest has been showing some very scary, Enron-like symptoms for a while.

The takeover of Alliance/Atlantis really took it over the top. They are bleeding cash and it shows in the programming.

They have totally abandoned their CRTC licence mandates...unless Revenge of the Nerds II on the Lone Star channel is now suddenly a western film

Anonymous said...

Another point: Izzy was a great tax lawyer. A genius.

The sons? Eh, not so much.

Hard to keep the plates spinning in the air when you're naturally clumsy.

Ottawa Watch said...

They made them stop running that insipid "JAG" on the History channel. So they replaced it with "NCIS". They have no idea what history is. They think history is war and war is history. I suspect no one involved with the station has a clue about history or is particularly interested in learning anything about it.

JA Goneaux said...

TV seems to be in its 6th or 7th decade of getting worse.

We ordered ExpressVu last year, and it looked promising. Love the PVR and time shifting. Some glitches, but I never miss a show now (finding time to watch 80 hours of stuff is the problem now...).

I miss Turner Clasic Movies and AMC, but thought that DriveIn, IFC and even Showcase Action would suffice.

And it did for awhile.

Showcase and Bravo used to be ok too. Showcase advertised itself as "Television without Borders", and promised great, world-class movies at 10PM every night.

Now what do we get:

Monday: My Name is Earl
Tuesday: The Shield (my fave, but...)
Wednesday: The Riches (second fave, but...)
Thursday: Saving Grace
Friday: Porn
Saturday: Movie
Sunday: Weeds

Some nice shows, but no movies.

Bravo is worse: Law and Order, Without a Trace, DESPERATE HOUSEWIVES?!?!

I won't even mention the abomination that the History Channel has become. NCIS is just the tip.

Basically, the "convergence" has worked out to be:

- CTV, Global and Rogers buying massive amounts of American shows and trying to stuff them onto their various networks

- What can't fit on CTV goes first to A Channel.

When they become re-runs they go to Bravo or the other "specialty" nets, with as tenuous a connection to the "specialty" as possible (Will Smith used to rap. Therefore any movie he makes can go on Much Music).

When they become really old re-runs, they go to TV Land.

If it has boobs, it can go to DriveIn.

- What can't fit onto Global goes first to E!

When they become re-runs they go to Showcase or the other "specialty" nets, with as tenuous a connection to the "specialty" as possible (NCIS occurred in the past, therefore its History).

When they become really old re-runs, they go to TV Tropolis. OR DejaView.

If it has boobs, it can go to Showcase Diva/Action, unless they are scientific or historical boobs, then they can go to National Geographic/Health/History.

A special trifecta for a show about, say, a restaurant makeover: HGTV, then Food Network, maybe Slice. Hell, why not Discovery Health if there's a change of food poisoning.

My old college teacher Jim Henshaw has a great blog about, among other things, "the ahts", including TV in Canada. As a conservative producer, he tends to have a view perhaps you haven't heard:

http://the-legion-of-decency.blogspot.com/