TORONTO (Reuters) - Canwest Global Communications CGS.TO, Canada's biggest media company, said on Tuesday that it planned to sell two of its five regional television stations as it struggles to restructure its mounting debt load.
The Winnipeg, Manitoba-based company, which owns Canada’s Global television network, Australia’s Network Ten and a chain of daily newspapers, agreed to sell CHCH-TV in Hamilton and CJNT-TV in Montreal to private broadcaster Channel Zero Inc.
Financial terms of the deal were not announced.
The move comes almost five months after Canwest said it was reviewing its television strategy with a focus on its Global television brand. CHCA-TV in Red Deer, Alberta, CHBC-TV in Kelowna, British Columbia, and CHEK-TV in Victoria, British Columbia, remain on the auction block.
“The reality is that these stations have not been profitable, so what we are reducing is drag on profitability,” said Canwest spokesman John Douglas.
Douglas said the company continues to seek buyers for the remaining three stations, but will wind them up if they cannot reach a deal.
Canwest said the agreement on Tuesday with Channel Zero was conditional on a number of factors including approval from the federal broadcast regulator, the Canadian Radio-television and Telecommunications Commission.
Channel Zero, known for its digital specialty networks including Movieola and Silver Screen Classics, will honor the existing licenses of the two stations, which call for 13.5 hours of local ethnic programing a week at CJNT and 36.5 hours of local programing a week at CHCH.
Channel Zero has also agreed to maintain current employment levels at the stations and will seek a one-year renewal of CHCH’s collective bargaining agreement.
Canwest shares, which hit a 52-week low of 13 Canadian cents last week, rose 3.3 percent to 15.5 Canadian cents on the Toronto Stock Exchange on Tuesday.
The media company has been trying to avoid collapsing under its massive debt as it struggles with sharp advertising declines due to the recession.
Canwest said on Tuesday that holders of its 8 percent Canwest Media Inc notes agreed to extend the deadline to July 31 for the company to reach a deal on a recapitalization plan.
The agreement was set to expire on Tuesday after the deadline had already been extended several times.
Canwest’s overall debt stands at close to C$4 billion ($3.4 billion), some of it dating back to its 2000 acquisition of newspapers from former press baron Conrad Black’s Hollinger International.
The company has already announced a string of small deals, including the sale of its stake in sports broadcaster Score Media, as well as the U.S.-based New Republic magazine. It also sold its indirect interest in four Turkish radio stations.
Additional reporting by John McCrank
Our Standards: The Thomson Reuters Trust Principles.