Len Asper

October 2007

With two main broadcast networks, eight thematic channels, radio stations and daily newspapers, CanWest Global is a major media player in Canada. Its international television assets include Network Ten in Australia and a TV station in Turkey, while in Canada it recently acquired 13 specialty channels from Alliance Atlantis. Len Asper is concentrating on consolidating CanWest’s existing businesses, all the while keeping an eye on opportunities in international markets as well as in the digital world.

WS: What motivated the acquisition of Alliance Atlantis’s bouquet of channels?

ASPER: We want to expand into a higher-growth business, which is the specialty channel business. It’s growing for two reasons: one is the penetration of digital and even analog cable continues to grow, but so do new platforms like satellite and IPTV, so there’s more subscription revenue. There’s also an increasing plate of advertising dollars that is going more to thematic channels than to conventional television. We think a great combination is having the two big conventional channels that can acquire the big event programming and then also have them surrounded by the army of specialty channels that are themselves high growth businesses. They can also work together with the conventional channels to create better programming, more opportunities for advertisers and the cross-promotion that we give to each of the channels.

WS: What further growth do you see in the Canadian television market?

ASPER: I think it’s on digital platforms. You might see a few more linear channels launch and we certainly are continuing to look at the potential of new linear channels. But I think the growth is going to be in extending the audiences we have onto web-based platforms, whether it’s Internet directly or cell phones or any kind of personal devices, even video game consoles and iPods. Video on demand and pay TV are also going to continue to be platforms where specialty and conventional broadcasters can expand their offerings. It’s going to be more of an organic growth rather than necessarily launching a whole slate of new channels.

WS: What impact is the increased consolidation in the Canadian market having on the media business?

ASPER: I think it’s good because it will make for a stronger industry. As borders break down, because of technology, it’s important for each country, for its own cultural reasons, to have its own strong broadcasters who have the ability to invest in domestic and home-grown programming, whether it be news and information, drama or lifestyle programming. [Consolidation] makes for a stronger industry with a greater ability to invest [not only in programming] but also in the transition to HD, or the transition to more advanced sales systems—that do much more customer tracking and customer relationship management—or in building digital archives content management systems.

We’re spending a lot of money on those both in Australia and in Canada because the content offering of the future, which is already here really, will be not just a half-hour show or an hour show, it’s in minutes, it’s webisodes, it’s clips. All of that has to be digital. So upgrading the plant, and broadcasters around the world are in various stages of that, it’s 5, 10, 20 million dollars sometimes. When you’re a small company that looks like a really big expense. Once you get larger, you are more able to swallow those kinds of major capital expenditures. Consolidation will mean not only investing in programming, but investing in technology which will be for the benefit of consumers. That’s probably the major impact.

WS: What are your plans for more international growth?

ASPER: Through Eye Corp, our out-of-home advertising business, we’re now in Singapore, the U.S., the U.K. and a few other markets. Because of the digital world we live in now, one doesn’t have acquire assets around the world to be international. We’re more focused now on expanding where we are, with the exception of Eye Corp, which will continue to try to win tenders and go around the world; we believe that that’s where the opportunities for expansion are for them.

In Australia, Network Ten’s more focused on building out organically its digital platforms. We’ve always wanted to get into more pay television in Australia, but it’s a fairly closed market. That remains an area of intense interest for us as well. In Canada, we’ve got to digest what we’ve just acquired and focus on digital opportunities. The investment in Turkey was part of the plan to expand into the Central and Eastern Europe. That plan still exists although I would say it’s on a bit more of a slow path because first of all we’d like to expand in Turkey. We know the market. It [presents] a terrific economic opportunity for us and it’s got a lot of the characteristics that we think are important to merit further investment. So we would like to expand in Turkey first. You’ll see us focused more on growing [our existing] operations and expanding within those countries rather than necessarily launching new ventures in new countries.

WS: What is CanWest’s strategy for producing content? Do you want to let your channels produce what they need or do you have plans to set up a studio operation to feed them?

ASPER: I don’t think we would do an external studio, I think it’s much more a question of letting the channels produce their own product. We were into Fireworks and we tried the route of producing content for the world. We have learned how that market can go up and down and we’re much more comfortable now just producing the content we have to, often in conjunction with partners for the channels we have.

We’ve quietly turned our capabilities into more production oriented than acquisition oriented. If you go back five years, our expertise was in acquiring programming and scheduling it and selling advertising against it. Whereas now we have a better capability for producing content. That is most evident with our production of Deal or No Deal in Canada, where we really staged a world-class production that got significant ratings. It also created record levels of web traffic for us and a whole multimedia environment that generated revenues on all the other platforms as well as the advertising revenue. It was the most-watched Canadian premiere of the year and it cracked the top 10 shows, which is unheard of for a Canadian show, since we compete with the high-budget U.S. shows. That’s something we couldn’t have pulled off five years ago. We have strengths now in the areas of production and when we merge them with the Alliance Atlantis capabilities, they do a lot of their own productions—Home & Garden Television, Food Network, Showcase, DIY and some of their channels. So there’s a capability within Alliance Atlantis which I think will benefit us as well. We’re going to produce more of our own content—not only programs, but all these off-shoots from the programs, whether it’s the e-clips or the iPod versions. You’ll see us now being able to produce content that’s not even necessarily going to appear on television, it might be web-only content. That’s an expertise that is more in house today than it ever was.

WS: With the portfolio of assets that you have, you can offer advertisers cross-promotion buys. Are you seeing an increased demand for that?

ASPER: Certainly, even with our newspaper group, we’re selling ourselves as not just a TV channel; we’re selling ourselves as a publisher. Because we’d be missing the boat if we just said. “Oh advertise in our newspaper.” Here we can say, “You’re going to get this many people with the newspaper and your going to get another bunch of people on the website, and another group of people on the iPod, and another group on the Blackberry.” It all adds up to x-number of people. By the way, on anything that’s digital, we have much more specific information about the demographic. With conventional media Nielsen information is nice, but it’s not [the same] as getting a specific idea addressed from a user on a website. As you migrate your relationship with your viewer to other platforms, you get to know much more about that viewer. [New media] extend the numbers and allows you to say, this many people watched my news last night, but then they saw it on the iPod and they saw it here and there, it’s really that plus 20 percent.

WS: The iPod, the Blackberry, the cell phone give you the opportunity to migrate a lot of the content you produce from traditional television to new media.

ASPER: Our national Canadian newscast was the first to go on podcast, and ever since then it’s been the most downloaded newscast in Canada. We had huge revenue from texting and game playing on the Deal or No Deal—people were playing along on the website while the show was going on and people were texting in—and of course we get a piece of that. The content’s sell across the different platforms—we might have a show that skews women 25-54, but now we have a few specialty channels that also skew that way that we can package together. You provide advertisers with an even better offering and a more specific offering.