PREVIEW-Consortiums seen key in Canwest newspaper auction

* Deadline for bids midnight March 5

* Bids examined to see if second phase needed

* Newspapers could be worth at least C$1 billion

OTTAWA, March 5 (Reuters) - Consortiums keen to acquire all the Canwest Global Communications CGS.V newspapers up for auction are seen as leading contenders in the bidding process, which has a bid deadline of midnight on Friday.

Canwest, Canada's biggest media company, won creditor protection for its newspaper group in January as it crumpled under the weight of a debt load of nearly C$4 billion ($3.8 billion).

The Winnipeg-based company has said offers for the entire newspaper business, made up of 46 community and daily newspapers including the National Post, will be given preference over bids targeting specific assets.

"These are very good cash generating businesses, so properly capitalized - and that's the key - these business throw off a lot of free cash flow," said Chris Diceman, senior vice-president of rating agency DBRS Ltd, which has tracked Canwest's debt.

"These assets should be worth, I would think, at least C$1 billion."

After the bid deadline passes, it will take some time for bankers to examine the offers and determine which should proceed and whether a second phase of the sale and investor solicitation is necessary, a Canwest spokesman said.

If the court monitor finds a reasonable prospect of a better bid, the sale and solicitation process can continue for a further seven weeks.

If not, the auction moves to a second phase, where bidders can comb through detailed financial information on the newspapers' operations. Seven weeks after that process begins there is a deadline for a second bid.

A group of lenders owed money by Canwest and representing Canada's five biggest banks has offered to buy the newspapers for about C$925 million and take the company public. Led by the Bank of Nova Scotia (BNS.TO), the group is not expected to keep the newspapers if a richer bid emerges.

There has been growing speculation on a lengthening list of potential bidders, notably two big consortiums that are seen eyeing the entire unit rather than select assets.

"The size of the purchase - it's a major acquisition in this market - leads me to believe that it's more likely you would see a number of combinations of consortiums (bid)," said Diceman.

One group is led by Paul Godfrey, president of Canwest's National Post newspaper and a former CEO of Quebecor's (QBRa.TO) Sun Media chain, the Globe and Mail has reported.

Godfrey is joined by CanPages Inc, a telephone directory business, in the consortium, backed by U.S. private equity firm Hicks Muse Tate & Furst, unnamed sources told the Globe.

A second group is said to include Glacier Media Inc (GVC.TO), which publishes more than 100 community and daily newspapers, and is led by former investment banker Jon Kennedy, the Globe said.

Another group of bidders, including a former Canadian senator, has said it will offer to buy the Montreal Gazette, the Ottawa Citizen and Canwest's flagship National Post.

The group did not disclose an offer price, but said it had strong financial backing from six individuals.

This week, the owner of a British Columbia group of newspapers, Black Press Ltd founder David Black, also joined the bidding, the Globe reported. Platinum Equity LLC, a California private equity firm, is the most likely backer, the paper said, citing unnamed sources.

Canadian newspapers, like publications elsewhere, have been badly bruised by the recession and Internet competition.

Some of Canwest's debt is tied to its big 2000 purchase of newspapers from Hollinger International for C$3.2 billion.

Canwest acquired 13 dailies, 126 community newspapers, Internet assets and a 50-percent stake in the National Post, of which it later took full control. ($1=$1.03 Canadian) (Reporting by Susan Taylor; editing by Janet Guttsman)