Why Is Goldman Advising CanWest On Its Programming Line Up?

Tyler Durden's picture

When a few weeks ago we presented the concept of certain banks stealthy encroachment into the media world we were half joking. After all, the FCC would never allow Wall Street entities, even with equity control, to have a say in program line up and content, right? Needless to say, the potential for abuse (call it brain washing, or what you will) is simply staggering. Separately, two days ago, we highlighted the bankruptcy of Canada's biggest media company, CanWest, whose bankruptcy filings we are still combing through, looking for some of the usual suspects. Which is why we read with great interest Andrew Willis' article in today's Globe and Mail "Inside Goldman's deal with CanWest" which may have helped us, and our readers, elegantly put some of the pieces together.

First, some highlights on CanWest's pre-existing relationship with Goldman Sachs:

Goldman Sachs bankrolled CanWest chief executive officer Leonard Asper in 2007 when he bid on Alliance Atlantis Communications. It’s fashionable to give Mr. Asper a hard time for that deal, but it was well structured.

CanWest got control of money-spinning channels, including History Television, Showcase, and Food Network Canada. The company had to put up less than $200-million. (Which is not to say Mr. Asper didn’t make mistakes: Failing to sell the Australian TV network and buying back CanWest’s newspaper income trust were doozies.)

However, in return for its capital in 2007, Goldman Sachs got two contractual agreements that the new owners would love to overturn, because these provisions give the investment bank a potentially enormous stake in the TV unit.

In simple terms, Goldman Sachs has the right to sell back its specialty TV stake at a premium price. And the investment dealer will eventually set the level of its stake in CW Media based on a formula that reflects the unit’s performance.

If CanWest’s new owners can negotiate a change in the formula that determines the investment dealer’s equity stake, or trim what the investment dealer makes when it moves to sell that holding, they are effectively shifting the value of the specialty TV business from Goldman Sach’s wallet into their own back pockets.

And over time, CW Media is likely to be sold at a premium price - likely eight times their forecast EBITDA. Astral and Corus are at the front of a long line of potential buyers.

And for the piece de resistance:

Goldman Sachs sees no reason to revisit its arrangement with CanWest, which has been blessed by Canadian regulators, according to several sources close to the investment dealer.

To date, Goldman executives have not been invited into restructuring talks, a subject of considerable frustration at the investment bank, sources say. Financiers working with Goldman said that over the past year, the investment bank put forward programming ideas for the TV networks, and offered strategic advice on restructuring, but was ignored by CanWest management and its creditors.

One concept that’s been tossed around, but couldn’t move forward until CanWest recapitalization was set, would see Goldman Sachs provide programming and financial support to the conventional television network as part of a larger deal that reworks the entire ownership structure to more closely align all the TV holdings.

Earmuff time: why the fuck is Goldman even considered to provide "programming ideas and support?" Granted this is a case where the firm obviously has extensive and deep tentacle reach, however it is the biggest Canadian media company. And if Goldman can act with impunity to determine what the channel line up and who can and who can't be on TV, does this not raise a huge ethical problem straight out of modern version of "1984"? Although CNBC anchors can rest assured that if the Comcast deal does work out and they all end up jobless, there will be a willing home for them to spin their propaganda.

Also if this is true for CanWest, just where else does Goldman Sachs provide "programming idea" advice? Granted, the gullible audience does not care as it is brainwashed into the next massive paradigm, be it securitization part 2, or "buy, buy, buy any stock on the dips," in fact max out your credit cards just so you can own the next pets.com for the short period of time before even that is worth zero. After all, those fine TV people said so, compliments of Goldman's TV station content line up brigade.

And even as Goldman is ultimately everywhere, what is troubling is that, as Zero Hedge discussed previously, distressed hedge funds will soon end up assuming equity stakes in a plethora of soon to be CanWests, however this time in the U.S.

There are three funds driving the CanWest restructuring, and two of them are U.S. money managers: GoldenTree Asset Management, Beach Point Capital Management, along with Toronto-based West Face Capital Inc. Sources say these funds have already doubled their money on their CanWest investment, in part because the Winnipeg-based company’s stake in Australia’s Ten Network Holdings Ltd. was sold for a better-than-expected $634-million last month, and much of this money was used to pay down debt.

In looking at the emerging ownership of CanWest, which is tilted heavily towards U.S. distressed debt funds, one source said: “The government [of Canada] doesn’t want to see these assets flipped, for a quick profit. The goal should be to build a vibrant media company.”

So look for both sides to smooth things over. Finance circles are small. Distressed debt funds that are creditors to CanWest also own debt in CW Media, the specialty channel division, which should calm negotiations over the future of the specialty TV unit. These funds are also Goldman Sachs clients.

There are two alternatives at this point: the FCC can take a long hard look at the issue of just who is it that is running the brainwash brigade these days (unlikely), or, more likely, a recommendation to turn off your TV, radio, and Kindle for good. Hopefully between that, and stopping trading, the only means for the squid to continue generating record amounts of revenue will finally run dry. Unfortunately, having become a virtual monopoly of every aspect of modern lives: from the stock market casino, to American Idol, to the four letter named GE-infomercial station, the only way to starve the cephalopod, is by radically changing every aspect of our own everyday lives.

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TumblingDice's picture

good stuff tyler.. The penultimate line of defense for the first amendment is the Internet. (with the ultimate line being the second amendment of course) Dont let the scumbags censor it.

These severe breaches of ethics are why we have the regulation we have, to stop this from happening. Seriously, thats why its there. The technocrats think its there to chase around that douche mark cuban but actually its there to protect the people. If they dont get on the job all trust will be lost.

I already suspected that Goldman made programming recommendations in a pure advisory role, but them doing it in a stake holder role is an even more obvious example of corruption.

1984 indeed.

Anonymous's picture

This reads like a classic Goldman ice cream paint job.

boooyaaaah's picture

My Hero , Rush limbaugh said today that GS is handling his purchase of the St Louis Rams

I never heard Rush comment on the banksters, the captured SEC, Naked Shorting, The Markopolis testimony

So has the Right wing spokesman been compromised?


VegasBD's picture

Yes. But I'd be more worried bout Big Pharma. ;)

TumblingDice's picture

My Hero , Rush limbaugh

I just hope to all that is holy that youre not serious. Rush Limbaugh, Keith Obermann, Bill Oreilly and others of their like are hopeless wastes of an active pineal gland. Truly idiots. The sooner you stop listening to them the sooner youll think clearer and get rid of that numbing headache.

Anonymous's picture

Damn hipsters.

Anonymous's picture

The only thing Rush Limbaugh is good for is making fat jokes.

Cursive's picture

He might as well have said, "I like getting ass-raped in the morning."  When's the best time to buy an over-valued NFL franchise?  At the start of economic depression and a year before the labor agreement is renegotiated.

Anonymous's picture

Limbaugh is part of the game. Keep the sheeple arguing amongst themselves over petty "Republican vs. Democrat" issues when the real war is plutocrats vs. everyone else.

Bearish Spirits's picture

I had been skeptical of him for the past few years, but the confirm came when he switched from "Obama is talking down the economy, it's not that bad," to "the economy under Obama is terrible!  Look at the market!"(March lows)

I couldn't believe he wouldn't admit there was a meltdown occurring in '08.  As soon as Obama was inaugurated, the economy became his fault?  I never even considered voting for Obama, but I have to be fair about it.

Very good point about Rush not mentioning any of the systemic abuses.  I found out about those when I stumbled upon Denninger and ZH.

VegasBD's picture

"Tyler Durden ran down a cephalopod boss, thats gotta be worth somethin."

Lothar the Rottweiler's picture

We're all the media now, that's why they're trying to clamp down on bloggers (FU FTC).

These here internets are our last hope for salvation.  If they get control of the net, that's it.

Anonymous's picture

Actually, the internets are probably a blessing for TPTB.

Want to know who the 'thinking' people are, who are most likely to be aware of what's going on and cause 'problems'? ISP logs provide a nice database of exactly who has been reading what. Before the internet, they had no clue. Now they have the targets served up on a platter.

Just a (chilling) thought.

Anonymous's picture

AT&T spy routers connected directly to GS HFT platform? Does GS collocate in the AT&T spy rooms?

Cistercian's picture

 I have not watched television in 2 years.The beginning of the path in this society is to unplug from the matrix...and when you do, weird things happen.After a time you notice how many people discuss the shows they watch on television.First, they waste their time inhaling a synthetic and numbing reality.Then they waste more time talking about this fictional crap.No wonder the culture is overrun by super villains...hardly anyone is awake or paying attention.They are dreaming limited dreams written by hacks, while life passes them by...and their country descends into a dystopian nightmare.

 What a suprise the evil GS would own media outlets and want to provide programming.



Miles Kendig's picture

Someone else that thinks the copy at CNBC is written by the folks that do "The Hills" at MTV.

Cheeky Bastard's picture

with you on that one; i used to watch Formula 1; but now, i just DL the torrent of the race and watch it on my PC; and my mental abilities have increased minimum 500% since i dont watch, own or need a TV.

Edward King's picture

With you Cistercian. I ditched my television and my automobile three years ago. It is amazing how clearly you think when all your urges are your own. The television and the radio (preying on captive automobile travelers) have been programming humans for decades. When your brain clears it is also amazing to see how clouded the thinking and judgment of others has become. When you abdicate all your time outside of work to passively watching television and listening to the radio then you have no self, only what you are told is your self. Turn it all off.

SteveNYC's picture

Beautifully said. Likewise, very little TV for me for the last 3yrs. Can't say the same for the wife most that I know.

It is a brain-washing, brain-numbing device. Listening to people talk about their TV shows (American Idol is my favorite) is scary, as it shows just how downright stupid people have become.

The masses can not possibly learn, until the pain is great enough to pull them away from their garbage intake and they "wake up".

arnoldsimage's picture

and don't forget football, baseball, basketball, hockey, soccer, tennis, golf and any other sport that offers americans another opportunity to quench their thirst and fixation on small balls. 

VegasBD's picture

Ive given up TV also, except for Cheers.  I watch my DVRed two episodes of cheers each night before I start writing. Sorry, I cant give that up.


Funny note: Watched an episode recently where Woody was running for office and didnt know anything. Frasier LITERALLY SAID "dont worry, all you have to do is say change over and over and over and youll get elected!"   Freakin awesome.

Lothar the Rottweiler's picture

Woody probably still voted for Barney Frank.  Cheers is in Beacon Hill, after all...

SilverIsKing's picture

I agree although Curb Your Enthusiasm and Entourage are must sees.  After those, there's nothing.

bigblackhole's picture

I ditched my television and my automobile three years ago. It is amazing how clearly you think when all your urges are your own.

Yeah, and instead you rely on the Internet. Nope, no conspiracy theorists or propaganda artists there! *whew* Dodged that bullet!

deadhead's picture

TO: Canada

Please be advised that you are under attack.

First, your media.

Then, the oil shale pits.  All your oil belong to US

.....though it has been many years, I do hope the canadian ballet is left as is.....

Anonymous's picture

Oh, don't worry. That's why we have troops in Afghanistan.
To learn how to *make* IEDs for when the Yanks decide to liberate 'their' Alberta oil from the Chinese.

Anonymous's picture

Sam Zell dictates to the Chicago Tribune and LA Times, etc what to print. Bloomberg dictates to Bloomberg. Sumner Lipshutz dictates to Time Warner. Sulberger dictates to the New york Times. Jack Welch to CNBC. Rupert Murdock to Fox News. Bronfmans to Sony. Tisch to CBS news. The US has more propaganda than any other nation brainwashing the masses.

pinkboxtrader's picture

This could simply be their analysts recommending what types of programming would best match up with demographics and ad revenue.

Anonymous's picture

I quite like Blomberg radio, WNYC and WBAI...but thats just me, oh and gold.

lieutenantjohnchard's picture

"the only way to starve the cephalopod, is by radically changing every aspect of our own everyday lives."

which exactly is what i've done.

no cable: don't miss it except for tackle football. (espn 360 gives me plenty of college football)

no wsj (i use the online edition for headlines etc) or daily paper.

meanwhile, between zh, denninger, american thinker, rush, michelle malkin, goldseek, mises, rockwell etc etc and books basically i have all the information one needs.

you would be pleasantly surprised what life is like without tv.

Anonymous's picture

In a July 4 2003 column in Jewish World Review, Malkin, herself a U.S citizen born to foreign parents took a position in opposition to the Citizenship Clause of the 14th Amendment to the US Constitution, asserting that "the custom of granting automatic citizenship at birth to children of tourists and temporary workers such as Hamdi, tourists, and to countless 'anchor babies' delivered by illegal aliens on American soil, undermines the integrity of citizenship—not to mention national security"

putbuyer's picture

Great work ZH. As a ZHer, this kind of story makes my blood boil. To think that this is happening is beyond words. Only a drone does not see what is to come. How many times have posters said "and so it begins". It begins...

Anonymous's picture

Some would see the irony in the fact that the key property that GS co-owns with CanWest is a popular program where bureaucrats spend their time finding criminals and locking them behind bars...

Anonymous's picture

Where is law enforcement? Speaking of TV, I like Andy Griffin, if only we could set Andy and Barney on GS, they'd tell em "that ain't right" and put em in jail with Otis.

JR's picture

It’s important to remember that where Goldman is involved, rules are made to be broken. 

If Goldman is interested in controlling Canadian government the way it controls U.S. government, then it needs the largest media company in Canada to prepare elections and criticisms of existing political officials and to put emphasis on high-level litigations, corporate mergers, product development, and the full list of subjects that media can undermine or support.  And it goes without saying that media support is essential for the investment bankers' financial control of a nation's money supply. This is how Goldman Sachs gets its money to influence elections and to buy media companies—it controls the NYFed, the USTreasury, the USCongress and the USPresidency.

Anonymous's picture

CanWest was a joke. Their TV was just imported US pablum. Almost no real Canadian stuff. I for one would be happy to see them exit stage left ... for good.

unemployed's picture

Goldman would provide help just as the equity fund spent all those man years helping out Simmons in the mattress business.

Anonymous's picture

Because they gave them the money and they would like to be fucking repaid. Seeing that the company is having Thelma & Louise moment, GS comes up with some ideas how to put on the breaks. I would have done exactly the same thing, maybe make more fuss about it though.

Anonymous's picture

Because they gave them the money and they would like to be fucking repaid. Seeing that the company is having Thelma & Louise moment, GS comes up with some ideas how to put on the breaks. I would have done exactly the same thing, maybe make more fuss about it though.

Anonymous's picture


starring Hammerin Hank & Neil Kashkari
tonight's episode: Cash for Clunkers!

followed by

starring Lloyd Blankfein
as lollypop sucking Sgt. Dick Goldsack


Anonymous's picture

"the only way to starve the cephalopod, is by radically changing every aspect of our own everyday lives."

now we're talkin
project mayhem indeed

Cheeky Bastard's picture

it amazes me that so many people here listen to that dumb fat motherfucker Rush Limbaugh; fucking amazing ...

perfectlyGoodWhiteBoy's picture

I don't know if I'm amazed.  We have some nicely entrenched right wingers.

Anonymous's picture

If you are Canadian TV viewers, you will know that Global TV is just ears of the government, they praised on everything they did to help out the economy (They HIGHLY collaborated BUYING HOMES & GETTING MORTGAGES WHILE RATES ARE LOW stories all the time), how government did a good job on rescuing GM & Chrysler, how government did a good job on HST coming to BC and Ontario, BOLD out how Bank of Canada did to drop rates like our people down south does so that we can keep spending and forget this recession, how gracious we have a PM that doing all this to help us to survive...Major stories on Job losses, worsening economy, wrong government directions, home prices drop in certain cities, government's bad acts ARE DEAF AND MUTE to all Canadian viewers..

Brigante's picture

Try to imagine life without TV. Fine. That's easy for us... we're young and angry and smart, so we comfort ourselves with the net.Good.

No printed press, but headlines, free content, Google Finance and ZH. Great.

But somehow, crisscrossing the financial world, even after being bailed out by the US Gov, Government Sachs' shadow grows longer and darker.

And I tell you: I don't give a damn about conspiracy theories: that 'aint my reasoning style. In fact, that's what the herd loves. "Zyonist complot! greedy bankers! quantum traders! blablabla..."

But the fact is that almost every financial advisor in the world, treats GS' words as prophecies. They conform the scariest herd of all. I'm a Spaniard myself, and I freak out when so many of my friends at different banks and financial institutions follow GS advice with no rigorous criteria, whatsoever.

What will happen when fewer US banks remain alive, and GS buys out their remaining businesses? who will fight off the monopolistic Beast? Ssssshh... I know Mr Goldstein: the foreign banks will come to hunt you down. Let the capital free!!

Anonymous's picture

The CRTC-Canadian Radio and Telecommunications Commission, charged with overseeing broadcasting and bandwidth issues in Canada, has been an utter failure for nearly three decades now. They were warned about over concentration of the media in Canada long ago; because most markets are small, too much centralization would kill real competition, but they didn't listen. Now that it's over centralized, small market stations are deemed unprofitable and are cut to insignificance...when they were small private concerns they somehow got by, but once they got bought up they were quickly discarded or homogenized. Now it's such a mess that odious oligarchs like Goldman can leverage all kinds of concessions and changes...the current neo-republican Harper government is not the type to say no to corporate wishes.