Thursday, January 15, 2009

A DESPERATE LACK OF X-RAY VISION -- Pt. 2

There's no doubt that a dramatic shift in the way people access their entertainment options is well under way. Traditional business models in broadcasting, publishing and music distribution are all undergoing quantum shifts. It's a crucible of fire that vaporizes those who can't embrace change while forging new heroes imbued with the power to take us forward.

Last month, in part one of this mini-series, I looked at Ivan Fecan, one of Canadian broadcasting's super-heroes. This time out, it's Leonard Asper's turn.


The above photo of Asper (in the background) and Fecan was taken at the April 2008 CRTC hearings in which both men requested "carriage fees" to offset the huge amounts of company and borrowed money they'd just spent to purchase other local broadcasting assets.

The CRTC rightly turned them down, expecting that executives in their positions should have been aware of the potential cash-flow impact of such corporate over-reaching and maybe should develop better strategies than getting you and me to pay for their follies.

Spurned but unbowed, Asper proceeded to axe 560 of his employees in the month before Christmas, using the current economy and the CRTC's edict as his excuse.

A couple of months earlier (while the economy was apparently still rosy and the CRTC still considering his request for free millions) he'd turned out the lights at Cool-TV and the X-treme Sports Channel. Both were either a further example of Canwest unwisely wanting to have the most toys or that fewer young viewers are watching television.

The failures of these channels, however, were just the latest in a long list of botched business decisions by Asper.

In some ways, you have to feel a little sympathy for Len Asper. Like that picture of he and Fecan, he's always been the guy in the background.

The Canwest Global empire was founded by Len's father Izzy, one of the most astute business minds to come out of this country and rightly ascribed with the "Boy Wonder" title in his younger years. Within a decade of launching Winnipeg's third television station, he had parlayed it into a loosely knit string of independents that became the Global Television Network.

In many ways, Izzy Asper was our Ted Turner or Rupert Murdoch, determinedly turning stations the media derided as "The Love Boat" network (because of the constant re-runs of that series) into an entity a lot of that media soon worked for.

Even in its early stages, Global-TV was a force to be reckoned with. Maybe they weren't as innovative or ground-breaking as the competition up the dial at CITY-TV, but they were doing their bit.

Global pre-imagined the ESPN model of sports reporting with a nightly sportscast called "Sportsline" that launched such now internationally known sports journalists as Jim Tatti and Bob McCowan. They pioneered magazine shows, found a way to turn lottery draws into weekly variety specials, not to mention sliding aside the news desks and weather map in their single Toronto studio to produce the first seasons of "SCTV".

I got to watch a lot of this up close while hosting the absolutely, bar none, worst series ever to run on Canadian television, an ill-formed mash-up called "Pizzazz".

To this day, I have no idea how I got that job. But when the offer came in it was one of those that pays for a house outright. And I long ago learned that when they drop through the mail slot, you hold your nose, oil up, double-bag Mr. Happy and go to work.

"Pizzazz" was part "PM Magazine" part "E! Talk" with "Oprah" style interviews and "Designer Guys" segments thrown in while being liberally sprinkled with avante garde art and new age cures. Like I said, some guys at Global were ahead of their time. In this case, a little too ahead.

Yet, despite getting rightfully slammed right out of the gate, Global stuck with its original commitment of 130 episodes because they were certain it was serving their core audience.

Imagine that happening today...

During our many months of production, I met Izzy Asper only once. He was this mysterious guy who would fly in from Winnipeg, closet himself with the executives and then disappear back home, appearing little interested in the "exciting" things going on in the studios.

Toward the end of our run, I was also doing a play at a local theatre and a very glowing review appeared in one of the Toronto papers with my picture appended. They were scattered around the studio cafeteria and when I walked in one afternoon, I noticed Izzy reading it. He smiled and waved me over.

"You got another job", he said. I nodded. "Good thing."

We both laughed and he asked me to sit down. Although those were the only words that had ever passed between us, he proceeded to thank me for the work I'd been doing. Despite what it so clearly was, "Pizzazz" was bringing advertisers to the network.

Global was suddenly being contacted by companies who wanted their products showcased in episodes as well as celebrities with books and movies to promote in Canada. Producing their own shows, even a bad one, was raising the network's value and credibility both inside the industry and out in the world.

He said he hoped I'd come back and work for Global again. And later in life, I did, several times.

Although it was always a smaller player, Global did go on to create a number of notable dramas. And then a different mentality took over in the form of Leonard Asper -- a "Boy Wonder" of a different kind.


The company went on an almost immediate buying spree, gobbling up media outlets in Australia, New Zealand, the UK and even Turkey as well as Internet providers and a 20% share in the largest Canadian production and distribution player Alliance-Atlantis. Somehow what the network owned was becoming more important than what it produced.

In 1998, Canwest acquired Fireworks Entertainment, ostensibly to "own" its own production and television distribution arms. It was a deal that didn't make any sense to anybody in the industry. They already owned or had a share in foreign buyers for their product as well as a share in a thriving production entity. They didn't have to do this.

One Global exec described the deal as "Two guys with randomly firing synapses who happened to go off at the same time".

But Canwest still shelled out $40 Million to buy Fireworks and poured over $100 Million into production. Money seemed to be of no consequence if it increased the Empire.

That perception was reinforced at the Banff Television Festival when Fireworks CEO Jay Firestone proudly crowed that he was now "lighting my cigars with hundred dollar bills" -- just in case anybody really wanted to know how the taxpayer subsidy dollars involved in the new Canwest shows were actually being used.

It was an odd experiment which pancaked 5 years later with Canwest suffering a $200 Million write-down and selling much of the resulting library to Alliance Atlantis, a company Asper soon began maneuvering to acquire.

As my Cowboy grand-pappy was wont to say, "This is a fella you want to play poker with."


While buying all these new toys, growing bigger but also precariously unfocused by a lack of self-defining production, Asper began confronting the CRTC. He whined about onerous production levels and local news requirements and on one occasion lobbied to have infomercials classed as Canadian content.

He even complained about the ad dollars he was losing to specialty channels -- including some channels where he already shared in the profits. In his, perhaps overly measured world, it was always somebody else's fault that all of his various and increasing divisions weren't in profit.

Asper didn't gain Canadian citizenship for the Veg-O-Matic but he was among the voices that screamed loud enough for the CRTC to enact rules which devastated the Canadian production industry in 1999 by lowering the broadcaster requirements for drama.

Now, why would a guy who'd just bought a production company immediately strive to cut it off at the knees?

Well, the overall impression was that Leonard Asper didn't think that far ahead or changed his priorities on a whim. Or maybe he didn't really want to have to provide compelling Canadian programming. It was much cheaper and more profitable to rebroadcast US network content and be in co-pro partnerships where other people paid most of the cost.

I've never met Leonard Asper and I don't have a doctorate in Psychology. But if I could park this guy on a couch, I'm pretty sure I'd find someone who grew up with the mixed blessing of a wealthy and successful father and an overwhelming drive to prove himself. Some sons find it easy to emulate the old man because the footprints of the path and the relationships are clearly established. But some only learn the trappings of deal-making and empire building and not what it's really about.

ie: Daddy went to Toronto and bought stuff and everybody was happy. I'll do the same.


Uh -- Not a Boy Wonder -- but I thought some of you might need a break...

In 2007, Leonard Asper made another business deal that didn't make a lot of sense. He purchased Alliance-Atlantis. On the surface, it was a smart move, putting Canwest in control of most of the country's successful specialty channels. But to do it, he had to borrow an immense sum of money, saddling Canwest with $3.7 Billion in debt which has to be repaid two years from now.

Now he's in the unenviable position where the assets he owns aren't worth the debt they're carrying and his cash flow from rapidly declining ad revenue can't sustain both operations and interest payments -- let alone eliminating the principle.

The Empire is in rapid decline. One of the crown jewels, "The National Post" recently announced it was no longer publishing in Halifax, Regina and even Winnipeg, home to the company HQ. I assume the paper's name will soon be changed to "The Almost National Post".

Given that Canwest stock was trading at $20/share when Asper took over and this afternoon was going for a few cents either side of half a buck, it also seems clear that Bay and Wall Streets don't have much confidence in either Asper's management plan or the network's overall chances of survival.

And yesterday's Annual meeting wouldn't have given them much reason to think things are going to change. For starters, all shareholders were provided with a presentation which included the following illustration...


As you'll notice, in the world of these management geniuses, television was invented in 1968 or five years after guys like me watched the Kennedy Assassination and the Beatles on the Ed Sullivan Show. The computer came along in 1991, making me wonder what I was writing on for the previous ten years.

You can find the whole document here as well as a stream of the Annual meeting. Both are highly entertaining and have made me realize that if this is all it takes to impress investors, I could be the next Bernie Madoff.

Most notable is a feisty performance by Mr. Asper in which, among the many things he wants from the CRTC this coming spring, is a ban on US networks sending their signals into Canada after he's bought the rights to "House" or "24".

I'm not sure how that works. I guess those networks will just be dropped or replaced by a test pattern so you can only see one of those shows during the one hour Len decides he'll broadcast it.

Boy, I really want to be a Canwest buyer negotiating with NBC or Fox for new shows now that particular cat's out of the bag!

But, don't despair. Len also talks a lot about making your favorite American shows available on video on demand -- once they figure out a way to monetize it -- and using the Internet which -- in a stunning revelation to most Australians -- "is beginning to take hold down there".

Gee, what was I using ten years ago to watch "Hockey Night in Canada" Highlights while awaiting the next set of "Beastmaster" notes to be emailed from LA?

Meanwhile, another exec, one apparently charged with Canadian development, gushes about how all these new platforms will transform Canwest. "We can put 'NCIS' on History Channel and find a whole new audience there. We can put 'House' on Showcase. We can take 'Extreme Makeover: Home Edition' and put it on HGTV..."

'NCIS' on History Channel? Aren't they already doing that?

More importantly, you'll notice no mention of Canadian shows and much new programming shelf space replaced by endless repeats across the spectrum. Yeah -- the audience really wants that!

For as much as Asper insists that "Content is our best asset", he means stuff he buys elsewhere, which will then be crammed down your throat until he's wrung every penny he can get out of it.

So, the direction of the network is clear. VOD American series. Less new Canadian programming and a reduction in local news.

Just what we all want from a Canadian broadcaster.

Over Christmas, I caught a Global newscast out of Vancouver as the host introduced a "year in review" segment. It was a lengthy feed from ABC News with not one single, solitary Canadian or non-American story.

According to Canwest -- that's the all the news that fits.

Maybe somebody should let the CRTC know that Canwest doesn't have to request a reduction in local news. They're already delivering it.

Despite all of this, Leonard Asper and his team will be lobbying the CRTC come April for even further relief from their responsibilities to the Canadian public. And it's clear to me that they need to do this primarily as a way of covering for their inept management of the company.

And given the practiced indifference of some on the Commission, they may well get what they want.

Much as I don't want to see a Canadian network fail, I honestly hope that Canwest goes under as quickly as possible. And that's for a couple of reasons.

First, it may be the only way that new and truly committed players have an opportunity to get into the game.

Second and more important, it might be what's needed to remind the surviving networks that it doesn't matter how big you are or how many platforms you use to disseminate American product -- what matters to Canadians is that you make something here that resonates with them and reflects who they are.

Instead of a Superhero, Leonard Asper has turned out to be a poor excuse for a sidekick...

In part three -- some strategies to completely remove all of these people from your lives.

4 comments:

deborah Nathan said...

Excellent post, Jim. I hope part 3 is coming out soon.

JA Goneaux said...

Just in case any ExpressVu guys are Googling this: I'm pretty much canceling most of my satellite service very soon and going back to renting DVDs.

Why? Well I gave up cable, and TCM and AMC, but I was told that Showcase Diva and Action and DrivIn and IFC and Scream would have tons of movies.

So, lets look at 8PM next Tuesday:

IFC: The Rawside of...(i.e., a TV show)

Scream: Blackout (at least its a real movie, but its followed by Supernatural, a TV show at 9)

DriveIn: Xena. Are you kidding me? Been awhile since I've been to a drive in, but XENA?!?

Action Showcase: Earth Final Conflict. Another TV show, and a pretty bad one with pretty bad action. And the movie is "Airplane 2". Action? Huh?

Diva Showcase: Blue Murder. Are you SERIOUSLY kidding me?!?! And its followed by Cold Squad.

So for 4 channels, 2 hours of prime time, supposedly showing movies, and we get 6 hours of television shows out of 10 hours. Dumb. Just dumb.

Gee, what do Xena, Earth:Final Conflict, Blue Murder and Cold Squad all have in common? Oh, yeah, they're re-runs from Global.

Doesn't Global already have TWO re-run stations (TVtropolis and DejaView?)

And their website has up-to-date news...if your calendar says 2006...

So, guys, I would imagine I'm not the only one canceling soon. And that means you won't have to pay Canwest any money from me. Which should REALLY improve their bottom line...

Trevor B. Cunningham said...

Great post Jim. Look forward to part three (is it a trilogy? Will the shoe finally drop in the third act?) I wait with anticipation. Like JA Goneaux, I too have my anger with what I'm being sold. The cable is going VERY BASIC and I'm back to renting DVDs of movies and TV series I want to watch. ALL of these stations profess to be about one thing, then pull-out a crappy library of non-sense and charge me for it.

I believe with folks tightening their belts, the entertainment industry is not the only one who will feel the heat. Finally, everyone is waking up (myself included) that ANY INDUSTRY providing a service or product is going to have to raise the bar. In other words, old fashion ideas like 'earning you customer' and 'keeping your customer' should be the mindset. If not, good riddance.

Brandon Laraby said...

I've started watching my Can-Con online (legitimately) in the hopes that the people who're actually involved with the show will see some sort of direct residual from the show.

Fingers crossed!