Post by Shalgal on Apr 17, 2004 17:19:41 GMT -5
Apr. 17, 2004. 01:00 AM
CanWest to sell Fireworks unit, take $200M writedown
Moves to cut debt, boost cash flow
Locally produced TV series in doubt
TONY WONG
BUSINESS REPORTER
The future of made-in-Toronto television shows such as Mutant X and Gene Rodenberry's Andromeda is uncertain after a decision by CanWest Global Communications Corp. to sell its Fireworks Entertainment division and take a $200 million writedown.
"It has become clear that sound business principles could no longer justify the Fireworks business model," CanWest president and CEO Leonard Asper said in a statement after stock markets closed yesterday. Asper said the decision was made to cut debt and improve cash flow.
Fireworks series currently airing in North America include Mutant X and Andromeda. However, their future is uncertain since CanWest's decision to exit the business means Fireworks will no longer be involved with those series, John Maguire, CanWest's chief financial officer, told Bloomberg News.
CanWest purchased Fireworks in 1998. The company is headquartered in Toronto, with offices in Los Angeles, London and Dublin.
"The type of product Fireworks typically produced over the years was action adventure, produced primarily for the U.S. syndication market and the international market," said Maguire.
"It would typically partner with a U.S. company which would take the U.S. rights and Fireworks would retain the international rights."
The writedown will affect CanWest's second quarter ended Feb.29. In future reporting, Fireworks will be segregated from results of continuing operations and reported as discontinued operations.
Asper said CanWest tried to stem the bleeding at Fireworks, but decided to pull the plug after "continued persistent weakness in demand for North American content in international markets."
Fireworks is currently in discussion with "a number of parties" for the sale of its film and television library and distribution, CanWest said in a statement.
Kona Shio, analyst with Conscius Capital Partners in Montreal, said the move should help improve CanWest's cash flow.
"The company was drawing a lot of cash, so they're getting this issue out of the way," Shio said. "From a cash-flow standpoint this is good, because they are reversing the slide."
The company over the last year had tried unsuccessfully to stem losses by closing and outsourcing some theatrical film development, production and acquisition activities and had laid off staff.
"It had become clear that steps taken to date have not been sufficient to restore Fireworks' profitability and ensure its long term viability," CanWest said.
Open to question now that CanWest is selling its television production division is the company's commitment to Canadian-produced programming. Many CanWest hits, such as The Apprentice and Survivor, are American productions.
"It certainly raises that issue. How it can be resolved is another question," said Shio.
Asper said in a statement that "Global Television will continue to be active in support of Canadian production, including high-quality television series such as Wild Card and Strange Days at Blake Holesy High."
Fireworks was started in 1995 by entertainment industry veteran Jay Firestone to produce, distribute and finance television programs and later, feature films.
CanWest stock gained 10 cents to $11.25 in Toronto before the announcement.
CanWest to sell Fireworks unit, take $200M writedown
Moves to cut debt, boost cash flow
Locally produced TV series in doubt
TONY WONG
BUSINESS REPORTER
The future of made-in-Toronto television shows such as Mutant X and Gene Rodenberry's Andromeda is uncertain after a decision by CanWest Global Communications Corp. to sell its Fireworks Entertainment division and take a $200 million writedown.
"It has become clear that sound business principles could no longer justify the Fireworks business model," CanWest president and CEO Leonard Asper said in a statement after stock markets closed yesterday. Asper said the decision was made to cut debt and improve cash flow.
Fireworks series currently airing in North America include Mutant X and Andromeda. However, their future is uncertain since CanWest's decision to exit the business means Fireworks will no longer be involved with those series, John Maguire, CanWest's chief financial officer, told Bloomberg News.
CanWest purchased Fireworks in 1998. The company is headquartered in Toronto, with offices in Los Angeles, London and Dublin.
"The type of product Fireworks typically produced over the years was action adventure, produced primarily for the U.S. syndication market and the international market," said Maguire.
"It would typically partner with a U.S. company which would take the U.S. rights and Fireworks would retain the international rights."
The writedown will affect CanWest's second quarter ended Feb.29. In future reporting, Fireworks will be segregated from results of continuing operations and reported as discontinued operations.
Asper said CanWest tried to stem the bleeding at Fireworks, but decided to pull the plug after "continued persistent weakness in demand for North American content in international markets."
Fireworks is currently in discussion with "a number of parties" for the sale of its film and television library and distribution, CanWest said in a statement.
Kona Shio, analyst with Conscius Capital Partners in Montreal, said the move should help improve CanWest's cash flow.
"The company was drawing a lot of cash, so they're getting this issue out of the way," Shio said. "From a cash-flow standpoint this is good, because they are reversing the slide."
The company over the last year had tried unsuccessfully to stem losses by closing and outsourcing some theatrical film development, production and acquisition activities and had laid off staff.
"It had become clear that steps taken to date have not been sufficient to restore Fireworks' profitability and ensure its long term viability," CanWest said.
Open to question now that CanWest is selling its television production division is the company's commitment to Canadian-produced programming. Many CanWest hits, such as The Apprentice and Survivor, are American productions.
"It certainly raises that issue. How it can be resolved is another question," said Shio.
Asper said in a statement that "Global Television will continue to be active in support of Canadian production, including high-quality television series such as Wild Card and Strange Days at Blake Holesy High."
Fireworks was started in 1995 by entertainment industry veteran Jay Firestone to produce, distribute and finance television programs and later, feature films.
CanWest stock gained 10 cents to $11.25 in Toronto before the announcement.