Over the last few years, CanWest Global, as a whole, has undergone some significant organisational changes. Before the changes CanWest Global operated a regional television network, but due to the media/broadcasting acquisitions Izzy Asper was able to converge his holdings to become a national leader in the communications industry.
These purchases allowed CanWest to bring together its print, broadcast, and Internet holdings to create the countries most comprehensive, multiple-platform international media company. This synergy has not only made them an industry leader in the Canadian marketplace, but also an impending international competitor.
Izzy Asper is an international media mogul from Manitoba. His family, under his lead, is the driving force behind CanWest Global Communications Corp., one of Canadas biggest and most important diversified media companies. An industry leader at home, CanWest is positioning itself for global success and is currently Canadas only multinational broadcasting company.
CanWests acquisition of Hollingers newspaper and Internet assets, along with CanWests existing television assets makes CanWest Canadas largest daily newspaper publisher and the country’s leading Canadian integrated media company.
After acquiring the new companies, CanWest Global had to change their business processes. Instead of simply changing parts of the process, the company completely redesigned many of their processes. Furthermore, upon the acquisition of other companies, CanWest experienced conflict within almost every department in the company. Management from different departments throughout the organization had to contend with a head office in Manitoba rather than their regional branches.
CanWests strategy to implement the merging of the companies from the three media outlet groups was effective. Communication and trust between employees and management has been instrumental in the success of the change implementation. The company created a transition management team that implemented the change and shared the companys vision to employees.
The other component to being a media company in the future is having additional advertising platforms beyond just television and the Internet. For this reason, CanWest continues to move towards ownership of content. All in all they continue to move along an evolutionary path, constantly addressing their strengths and weaknesses and looking for areas of improvement. They have embraced change as a necessity to stay ahead of the competition.
The Canadian broadcasting industry is thriving and dynamic, according to the latest CRTC publishing of the Broadcasting Policy Monitoring Report. Total media advertising revenues increased by 7.7%, or $530 million, from 1999 to 2000. Daily newspapers garnered 41%, or $217 million, of this increase, followed by magazine and television at 16% and 15% respectively. There were 11 transfers of ownership or control of television broadcasting undertakings from June 11, 1999 to July 31, 2001, resulting in total tangible benefits in excess of $429 million. (Broadcasting Policy Monitoring Report 2001, October 30, 2001)
This inordinate amount of exchange in the industry resulted in significant impact on all the stakeholders of these companies involved. This paper will address one company in particular, CanWest Global Communications Corp., and its difficulties merging its regional networks into a national network, CanWest Global Network is managing the changes resulting from the acquisitions it made mainly within the last two years.
Izzy Asper is an international media mogul from Manitoba. His family, under his lead, is the driving force behind CanWest Global Communications Corp., one of Canadas biggest and most important diversified media companies. An industry leader at home, CanWest is positioning itself for global success and is currently Canadas only multinational broadcasting company.
20 years ago, the CanWest Empire got its start with a small independent television station in Winnipeg. Since then, through the gradual acquisition of conventional television operations in Eastern and Western Canada, the company founder I.H. Asper succeeded in building a cross-country network of stations by July 2000. At the same time this cross-country broadcasting reach was progressing, CanWest was diversifying into other media technologies such as radio, film and television production and distribution, and interactive media. They also expanded beyond the Canadian borders by acquiring interests and/or ownership of television broadcasters in New Zealand, Australia, Northern Ireland and the Republic of Ireland; as well as radio operations in New Zealand (www.canwestglobal.com).
Despite this drive to acquire size and international position, CanWest stresses their continued commitment to providing their audiences, readers and advertisers with the best available news, information and entertainment. Whether it is broadcast on radio, television, over the Internet, on movie screens or printed in one of their newspapers, CanWests goal is to produce the highest quality international and domestic programming, with high standards of journalism. They are also eager to provide advertisers access to the widest possible audience (vision).
Visions are rooted in reality but focused on the future (Jick, 75). CanWest has always focused on the future of the market and the companys position within the industry, while remaining realistic in their decision making. CanWest’s vision includes a strong corporate development thrust targeting new investments in complementary businesses in the media sector, and looks towards expanding presence in markets around the world and further diversification of its operations.
The companys vision was CEO-Senior team developed ( Jick, 145). The collaborative visioning of Leonard Asper and his senior management team has demonstrated the successful methods of forming and agreeing upon the same vision. Asper has envisioned the future of the company and has discussed this vision with the senior management team to refine it and conclude with a vision that they all believe in.
Izzy Asper spent 25 years establishing a national television network, and is the first person in the United States or Canada to build such a network. Mr. Asper knew that in order to compete globally, he would need to establish a media/broadcasting platform consisting of a production business, print business, outdoor advertising business, radio business and an Internet platform to launch the convergence of all these networks. With the stroke of a pen he was able to acquire a national print network, the Southam Group and Hollinger International newspaper, this revolutionized CanWest Global operations and catapulted the company into a leading position in the communications industry.
CanWests management is the first to admit that over the entire existence of the company it has been undergoing constant evolution. However, they claim they were dramatically reinvented for the 21st Century by two significant acquisitions:
In July 2000, the Global Television System – which began in 1974 with the launch of CKND Winnipeg, and expanded east and west – was completed with CRTC approval of CanWest’s purchase of the conventional television assets of WIC Western International Communications (History).
In November 2000, CanWest was transformed into Canada’s leading integrated media company and the country’s largest daily newspaper publisher, with the closing of a $3.2 billion deal to purchase Hollinger International’s Canadian newspaper and Internet assets. The acquisition included 14 major metropolitan newspapers, 126 community newspapers, Hollinger’s Canadian Internet operations, which include canada.com and faceoff.com, and newspaper portals across the country, as well as a 50% interest in the National Post (History).
These purchases allowed CanWest to bring together its print, broadcast, and Internet holdings to create the countries most comprehensive, multiple-platform international media company. Whats significant is the magnitude of these deals is that they are unprecedented. First the $860 million WIC purchase was the largest acquisition in the history of Canadian media. But now the $3.2 billion transaction to bring the Hollinger newspaper assets to CanWest remains the biggest media convergence deal ever consummated in Canada. The deal transformed CanWest into a $7.5 billion international media company and the largest Canadian publisher of daily newspapers. CanWests Canadian operations vaulted from being a near national television network with about 1,000 employees, to a multi-media company with over 10,000 employees. (President and CEOs Report to Shareholders)
By any measure, the most significant management challenge for CanWest in 2001 was to successfully absorb and integrate these new assets and their staff into the CanWest management systems and culture in way that will achieve the desired benefits. One would assume to achieve these goals, CanWest required some strategic additions and adjustments to top-level management, including a change of ownership in the case of the newspapers and online properties, and a substantial diversification in the case of their pre-existing television and entertainment division employees.
What encouraged CanWest to make these substantial changes is the level of synergy available in a diversified media company. Synergy is created when already profitable individual divisions become more valuable and generate higher returns when working together than would be possible if they continued to work separately. Altogether, the two transactions tripled the size of CanWest.
CanWest is a media company. As with other media companies, they make the majority of their revenue by generating content to serve the consumer, and selling advertising in and around that content to serve the advertiser. The WIC and Hollinger acquisitions will strengthen the capacity of CanWest to take full advantage of technology and marketplace advances across all forms of media. Through these acquisitions they have acquired some strong brands, additional advertising vehicles for their clients, and an unmatched content store – the blending of print and electronic media will be substantial.
Despite all the negative news surrounding their future of traditional television networks, CanWest believes it’s got a very strong and bright future with their conventional television network established. This will significantly complement their acquired holdings and favourably position the company to capitalize their assets. If another company were to own only one station in the market and end there, it would be a difficult road to follow, and investors may have some concerns.
The diversified nature of the company and managements proven track record of growth should lead investors to believe that the conventional television base, which they have, is being transformed into a much stronger better-supported base. The Internet companies will require broadcast television to get their messages out. So CanWest believes that the usual market hype over a new technology is overshadowing the reliable steady conventional market.
When companies undergo such significant changes as CanWest has recently, stockholders often get concerned about the safety of their investment. Leonard Asper addressed these concerns in a presentation to stockholders in November 2001. Leonard went on to say that CanWest expects to capture at least $30 million on an annualised basis in additional gains from integration and convergence in the coming year. It also remains a top priority to ensure that all operations reduce operating costs to take account of the weak economy. At the corporate level we will maintain our focus on reducing corporate debt in order to retain financial flexibility to take advantage of further opportunities for profitable growth as they arise” (Attention Business/Financial Editors).
CanWest feels the most important task over the next year will be to carry on the work they initiated in 2001. By following this established path they will reduce stockholder concerns, as it will become apparent that the companys focus is not just to acquire assets, but also to absorb and integrate them. CanWest management feels this would demonstrate a commitment to growth and prosperity.
When companies pursue acquisitions, common reason tells us each new initiative must make economic sense for the company by creating new efficiencies that reduce overall costs or by creating opportunities to increase revenues and profits.
CanWests decision to add to the corporate debt burden was not taken lightly. In particular, they have been careful to ensure that each of their acquisition decisions can be justified on a stand alone basis by carefully calibrated assessments of future financial revenue and costs, such as in advertising markets and in the price of newsprint. Cash flow from the existing businesses should be sufficient to restore ratios to 1999 levels within a few years. (Executive Chairmans Report to Shareholders)
It should be noted that close to four billion dollars was spent acquiring the necessary assets from 1999 on till present, and prior to 1999 there was relatively little capital expenditure.
For their part, CanWest is making serious investments in technology, its circulation systems, its telemarketing and its TV audience analysis. They talk to 30,000 Canadians a day and yet their system of collecting information arising from those conversations could be more effective with programming content. Their sales systems are technologically outdated and are investing there to make it easier for clients to buy advertising on their media and they are treating Internet properties as databases for the sales process because, like telemarketing, it allows them a one on one dialogue with their customers (Pearce, Ed).
CanWest believes that in order to be a successful company today, you have to look at yourself and say not only “how much did I make” but “how much did I give back.” With the expectation of governments to increasingly slash their budgets, corporations have to take a greater role in the communities they serve. Not only in the communities in which they have specific businesses, but since communications is so powerful and it can do so much good that one would hope there are responsible managers of these corporate entities that see that as well as profit-generation as their objective. In addition there is hope that, for the sake of the world, that’s what some of these even larger companies will do.
David Asper mentioned in his address to the Calgary Chamber of Commerce that the reason that they are able to speak about the affairs of the company is because they are not and will never be passive. Our research has confirmed that there is a hands-on ownership control group in their company. In addition to all of the bottom line imperatives, we found that they function with a philosophical framework. To the Asper family media, communications is a very special kind of business.
One of the most exciting things about this company is their aim to not just become a strong national media voice but to be based in western Canada. They believe that the context of how our country has been presented, in virtually all so-called national views, has been viewed through Toronto and Ottawa centric eyes.
At a luncheon David Asper mentioned that the real thing you and the world needs to know is that if necessary, we will continue to contribute to the papers, or recruit others to do so, in our determined and unwavering commitment to balance and diversity. We will vigorously seek out to be always truthful, ethical and fair, and by so doing we will set no precedent. The furor, I’m afraid came from people who freely criticize others without having the faintest idea of the truth of the matter, and who then can’t take it themselves, or who have political agendas that bear no regard to the reality of the newspaper business (Asper, David).
Before many of the changes occurred, the culture within the organisation was related to the CEOs background and thus was developed from top management. The Aspens are very professional business leaders and throughout the company most employees understand that the culture is derived from the values and practices of the owners.
Also, top management makes all major business decisions. So employees are given very little empowerment when it comes to making any sort of business decision. However the management has always kept the employees involved with what the current situation is and the future vision of the company. Management at CanWest felt that commitment begins from the top and that communication is important.
With the upper management and the CEOs determined to acquire other assets, chaos and uncertainly played major roles. Employees from each of the different companies were uncertain about their future at CanWest.
Management did their best to communicate the current situation and how it would be changed. Initially employees showed resistance to the change, however as time passed and employees became more informed of the situation and how they would be affected, most employees embraced the change. The acceptance of these changes was mostly due to the persuasion that the changes were for the improvement of the company.
Furthermore, upon the acquisition of other companies, CanWest experienced conflict within almost every department within the company. Members from other organizations joined existing teams or replaced others who where once part of a cohesive team. There were separate groups within each department that was affected.
Employees from CanWest sat and worked together where other employees sat and formed their own group.
Management is committed to integrating the departments. Department functions were held to help one another learn about the other employees. The employees were educated about the benefits of one another. Employees also began to realize that if they wanted to survive at CanWest that they would have to do the best to get along within their team.
Another factor that led to the cohesiveness throughout the departments is that management showed that they are committed to their employees and that the managers are walking the talk. As Clements article states, change must be driven from the top down, and in order for it to have any chance for success, they need to lead by example (35).
One of the television stations acquired and modified by CanWest is Global TV. Global’s national newscast will originate from the National News Centre in Vancouver and will appear on all Global network stations across the country from B.C. to the Maritimes and will provide an innovative early evening national news alternative for Canadians and a new national voice in news and public affairs.
The Global National team — supported by the entire group of Global station newsrooms and the combined journalistic power of the National Post and the entire CanWest newspaper group is positioned to become the daily newscast for Canadians.
CanWests multi-platform advertising strategy is becoming a well-known and accepted practice, among the industry. Their new six person specialized sales unit has been launched and it will be a prototype for similar units in each local market. In a Chamber of Commerce speech Izzy Asper talked about innovation and stated those points. Asper mentioned that he could not overemphasize our collective need – advertiser, agency and client, to increase our R & D spending. We simply must find a way, together, to bring more precision to our buying and selling decisions, and that can only be done through investment in information systems, both within our companies and collectively in the industry (Asper, Leonard). He further stated that the collaboration of the industry would convince advertisers of the value of buying media (Asper, Leonard).
When referring to the need for innovation Izzy Asper stated that the company had deployed significant new resources to create fresh, alternative voices in news and public affairs, voices that were not previously heard around the country (Asper, Leonard). Asper strongly believes that CanWest has united the East and West of Canada and allowed the country to have a national view. Asper also promises to add plenty more resources and bring new voices to the national stage on an ongoing basis (Asper, Leonard).
CanWest is now a national media company and is not finished with their global expansion plans. They are shoring up their home base before they continue with their mission to be a worldwide media company. They believe that there is no doubt that convergence, in all its forms, is the right strategy. The benefits are clear, it is just the magnitude of the convergence on a global basis that is the issue. How big do they want to be may be the bigger question.
CanWest started as a terrestrial broadcasting company operating station groups in Canada. The first thing they did was expand internationally. They decided to compete internationally because there were higher-growth markets globally. Entering the international market could also help them to become a larger group with access to different technology, different management expertise, as well as becoming a bigger buyer and producer of programming ensuring more efficient buying power and reduced risk. They have transformed the company and continue to transform the company to be a media company as opposed to a television company and are actively acquiring and starting new cable channels. CanWest is continuing to develop a strong online presence. And most importantly, they made a significant effort to become a major owner of content rather than renter of content. CanWest is trying to prepare for the digital age by being as much of an owner of communication as of content – and that includes both station-created news and information programming as well as the entertainment division. The entertainment division is doing as many series and movies of the week and movie distribution deals as possible to get ready to have that accumulation of programming and content as the digital pipeline arrives. So that is the thrust or emphasis of the company.
Right now the company is about 85% advertising – and that is too high, in CanWests view. They want to be somewhere around the 50% mark for advertising; the other three components would provide the other 50%, probably content being the next highest, but product sales and subscription revenues also being a major component. Likely, about 25% would be content-based revenue, the sale or programs, the sale of rights associated with programs (Calgary Chamber of Commerce).
CanWest is a generative learning organization because they lead. They acquire other companies to become more competitive. Because they are leaders and not followers, they are a generative learning organisation, which fits within the mold of CanWests organizational strategy. Leonard Asper recently stated, “CEOs are paid to look ten or even twenty years into the future, and they are paid to return profits to shareholders over the longterm…..” (Notes For An Address To The Canadian Club of Toronto Toronto).
In order for and manager or even CEO to look ahead such a distance, they must be able to envision. Also, innovation is required. The company must be able to forecast and innovate to what the future will be like. In Peter Drucker’s article, Innovation and Entrepreneurship, he suggests that an overwhelming majority of successful innovations exploit change. This can be said for CanWest who is of recent going under constant change because of all the mergers and acquisitions. CanWests desire to become a major player in the media industry can be related to Galbraiths article, where he suggests that an innovating company design with a purpose. CanWests purpose is to become a major player within the industry.
Staying ahead of the curve requires a shift in strategic direction as the number of competitors multiplies rapidly, and as new technological and other developments begin to emerge. CanWest feels that the future will bring accelerated change as digital conversion broadens to accommodate more consumer choices while the Internet develops the means of combining video-based entertainment comparable to conventional television with the ability to interact with viewers.
In the case of newspapers, there was once a time where local newspapers were overwhelmingly the source for news and information. But, like television, newspapers have also suffered from fragmentation as readers have gained access to more and more new means of finding the information they want, whether its on television, radio, the internet or even by word of mouth through the mass communication capacity of e-mail. The core of CanWests business strategy is to capitalize on this network media/broadcast convergence.
CanWest realizes its dependency upon innovation. As a result, employees are encouraged to take risks and be innovative. Employees are rewarded for their innovative ideas. As Paul Cook states the most important factor is individual recognition-more important than salaries, bonuses, or promotions(Taylor). Management understands the dependency on their employees ability to be innovative so all employees are encouraged to be creative. Fear of failure is an obstacle that inhibits all employees from taking risks. Clemmer states Fear of failure is a huge killer of innovation and learning (Clemmer).
The changes that have occurred within CanWest Global over the past 2 years were not just simply a management fad to reengineer or makes changes based on the management thought of the day. These changes at CanWest have been made based on the strategic goals of management. However, the management fad of reengineering is evident as one of the strategic steps taken as the company makes the transition to reach their goals.
After acquiring the new companies, CanWest Global had to change their business processes. Instead of simply changing parts of the process, the company completely redesigned many of their processes. Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed (Hammer, Champy). Because of the integration of several different companies which each had different cultures, processes and performance, CanWest had to make large dramatic changes in the way they organized business structures in order to disseminate a clear business process that worked for all. The management at CanWest had to think of new ways to accomplish the tasks of increasing productivity, quality and efficiency while controlling costs. The creations of CanWest Interactive and canada.com have accomplished some of these tasks.
CanWests agenda for integrating the important assets acquired over the past year goes well beyond injecting the CanWest culture and management style. “When we announced the purchase of the Hollinger assets last November, integration of the properties was the most important priority for CanWest,” said Leonard Asper, President ; CEO, CanWest Global Communications Corp. Asper continued to state that “the relaunch of our newspaper, television and web site operations under the banner of canada.com is a major step in that process and will give Canadians a superlative experience on the web” (Interview).
These redesigned business processes have been further efficient to the company and its customers. “This relaunch of our sites involves a major step forward for CanWest Interactive behind the scenes as well,” said Gary Maavara, Senior Vice President, CanWest Interactive. “We have integrated our systems and content handling capability, which will make it much easier to enhance our sites on an ongoing basis. This is another way that we will be able to serve our consumers much better.” (CanWestglobal.com)
While trying to combine the different cultures and processes of the acquired companies with those of CanWest, management had to look at reengineering in many ways. The reengineering of the company was seen as a new-product development (since they were expanding into new markets with larger market share) and as a redesign of company business processes (to manage each business unit efficiently).
Since the reason to reengineer is to gain cost-efficiency, service improvement and product improvement, CanWests goals to diversify revenue streams and create the four pillars upon which they believe the future media company must stand, are in unison with the reasons for reengineering.
CanWest created Canada.com as part of an ongoing program to introduce new operating efficiencies. This was partly achieved from integration of its major television, publishing and Internet assets. The goals of reengineering are reached as CanWest relocated the head office in order to manage all of its business units more efficiently. “Location of the facility in Winnipeg, will improve CanWest’s bottom line by eliminating duplication, capturing scale economies, reducing costs and improving internal and external communications” said Harry Ethans, Project Manager of the integration program. Eliminating departments such as A/R, A/P and the customer service call-in center in each of the individual newspaper groups and stations and centralizing them at the head office will reduce operating costs and will make communication between groups more efficient.
CanWest remains a combination of two distinct and equally important drivers: that aimed at constant improvement of current business operations, and that of ensuring future development and growth. In order to generate new revenues, CanWests sales and marketing teams began to seek methods of increasing ratings and circulation and to launch a new generation of multimedia products.
The bureaucracy at CanWest was not a hindrance but a help to this reengineering process. The bureaucratic nature of CanWest created a sense that the changes were controlled and well planned by the top management. While employees were still fearful of dealing with the radical changes happening within the company, many of them were calmed by the sense of control and direction provided by the bureaucratic hierarchy of top management. As Hammer and Champy comment in their book, without bureaucracy in traditional corporations, chaos will result (48).
When implementing a complex change program, its important to develop an underlying strategy for doing so. In the case of CanWest the change was implemented from the top down, meaning the CEO and other upper level management instigated the change with the middle and lower level employees adopting the new processes. Although each individual division of the company would enact a strategy specific to their needs, we chose to focus on the overall strategy adopted by the parent company to integrate these newly acquired assets. David Asper commented on their proposed changes in his address to the Calgary Chamber of Commerce.
The change strategy was started with a core group of key people that steered the necessary changes in the direction Izzy Asper wanted them to undertake. David Asper mentioned at a Chamber of Commerce meeting that CanWest proceeded by trying to keep everything as simple as possible. Working with a steering committee consisting of my brother, our COO Tom Strike, CanWest executive Dalbir Bains, myself and our integration co-ordinator Harry Ethans, we have established 12 teams working on 12 specific areas where we believe we can derive value, whether by creating new revenue or by cost efficiency. Our long-term list covers many more areas of the business, but we decided to prioritize in bunches of manageable size. (Calgary Chamber of Commerce)
CanWests strategy to implement the merging of the companies from the three media outlet groups was effective. The company created a transition management team that analysed the company and implemented the tactical solutions to make the changes.
Communication and trust between employees and management is essential for change efforts to be successful. It is important that the employees trust management decisions and believe in the same initiatives that are being implemented. Management must give the message to employees that they are serious in making lasting change efforts for the improvement of the entire organisation. There are several ways to effectively implement the change efforts.
Jeanie Duck believes that it is important to create a Transition Management Team to manage and communicate the procedures of the change effort (Managing Change,117). The transition team must communicate the organisations vision clearly and often to all employees. CanWest has created a transition management team made up of twelve groups of executives and on-line managers from operations across the company to scrutinise every aspect of CanWests operations to make them more efficient and more productive.
Jick believes that there are Ten Commandments that a company can follow in order to successfully implement change (195). CanWest created a transition management team to analyse the companys processes and make suggestions for the implementation of the change. The transition management team shared the companys vision to employees through meetings and e-mail. Except for the bureaucratic structure and the existing culture the company has separated the implementation of these changes from past changes. The transition team has created a sense of urgency by communicating the importance of implementing the changes effectively in a timely manner in order to remain competitive. CanWest supports a strong leader role with the CEO and the senior management team dedicated to the vision the successful implementation of the changes. CanWest has gained political sponsorship and support by many of those directly affected by the changes. The company has created a simple and specific implementation plan to carry out the tactical steps of the change process. CanWest has created some enabling structures and has allowed each group to develop its own structures to deal with the change yet has maintained an overall top-down control. Management at CanWest has done a great job in communicating to all employees and involving them in several meetings and allowing them to make comments. CanWest is committed to reinforcing and improving the changes it is making in order to make the implementation of the current as well as future changes successful. Based on CanWests actions during the implementation, many of the principles behind Jicks Ten Commandments have been followed (Jick, 195-201).
Izzy Asper is convinced that the consumer side of convergence is the direction of his company in the future; joint selling and cross-promotion is worth millions a year to CanWest. In 20 years from now Mr. Asper sees himself much bigger in production and distribution. At this stage CanWest dominates the Canadian market and can only grow internationally.
CanWest looks at Internet sites as just more narrowly focused cable channels, and when they say the “broadcaster of the future,” the media of the future will be terrestrial network and several cable channels. Leonard Asper stated that he would like to see television and 300-500 websites becoming strategic partners in the near future. Asper believes that promoting products across all of the communication platforms is very beneficial to advertisers and viewers. Asper stated as an example of this strategic partnering if there’s a television show on gardening that you have on your main network that you also are possibly airing on one of your cable channels, you’ve also got a website that complements that, and you are selling gardening hose and gardening gloves on that website promoting it all across your television platforms (Interview with Leonard J. Asper).
Finally, the other component to being a media company in the future is having additional advertising platforms beyond just television and the Internet. Therefore, CanWest is also looking at out-of-home advertising and radio businesses to be part of a larger media group. This is and example of a horizontal integration strategy across different advertising media to coincide with the vertical integration. These strategic actions continue to move CanWest towards ownership of content.
Twelve transition teams made up of executives and on-line managers from operations across the company scrutinized every aspect of CanWest operations to make them more efficient and more productive.
CanWests entry into the new century, taking on and absorbing the activities described above, presents them with new challenges and opportunities previously unimagined. All shareholders must appreciate the patience and dedication of the Board of Directors, always willing to meet on a moments notice to deal with these development activities. Similarly, the extraordinary efforts by CanWest management in achieving such complex and significant results must also be singled out for special appreciation.
CanWest Global is a family run publicly held company with Izzy Asper at the helm, he is the patriarch of the company but is making less and less decisions in anticipation of retirement within the next year or two. Mr. Asper is grooming his son, Leonard Asper to take over more and more of the day-to-day operations; however, he wants to stay on the board of directors after retirement.
Mr. Asper has had a career as a lawyer, journalist, legislator, business executive, and entrepreneur. As executive chairman, his primary focus is on the long term, external growth and development of the Company.
President and Chief Executive Officer
Mr. Asper, a lawyer, joined CanWest in 1991 as Associate General Counsel for the Company’s Global Television station in Ontario. Thereafter, he held various positions in Corporate Development, and most recently was Chief Operating Officer. He serves as Chairman of the Board of the Global Television Network and various other CanWest Global subsidiaries.
CanWest made two important executive appointments. Jack Tomik was appointed President of CanWest Media Sales Limited. Mr. Tomik, who has overall responsibility for national advertising sales will also lead the company’s new thrust in designing multi-media advertising solutions for national clients and developing integrated marketing programs for major event clients.
The company also announced the appointment of Kenneth J. Goldstein as Executive Vice President and Chief Strategy Officer. Mr. Goldstein an acknowledged visionary in the media industry will be extremely valuable to CanWest as the industry traverses a period of rapid technological and market change.
On December 12, 2001 in the Vancouver Sun, it was announced that Gordon Wilson has been appointed president of news and information. Mr. Fishers new job will put him on a team of executives dedicated to the convergence of CanWests broadcasting, print and Internet properties.
As they implemented the change process, a number of potentially troubling themes emerged. The most serious related to the risk of incurring a significant drop in productivity and bottom-line performance as people adjusted to the New World. It is recommend they take a lesson from their predecessors and continue to move forward, possibly at a slower pace due to the accumulated debt incurred, while being careful to detect and avoid the land mines that lie ahead by growing too fast while establishing a global media/broadcasting network.
When the news of the convergence of the newspaper groups and stations was announced, employees at several of the stations and newspapers were shocked and feared the change. Management at Pacific Newspaper Group (CanWest Publication), which is the Vancouver Sun, and the Province told employees in several meetings of the changes that were to occur in the dissolving of several departments within their organization. Many of the departments such as Accounts Receivable, Accounts payable and customer service were being centralized to the head office in Winnipeg. However because of the heavy union membership at the Pacific Newspaper Group, currently these changes are still in arbitration. The fear that many employees would lose their jobs was becoming more serious. CanWest received tax breaks from the Manitoba government for the employment opportunities that CanWest has offered by moving the head Office to Winnipeg. Employees in each of the groups were concerned that the centralization of many departments would mean a loss of jobs in the papers to increase employment in Winnipeg. (Chen, Interview)
Some of the employees at Pacific Newspaper Group were fighting against each other as the unionized employees that were being pushed out fought for retraining and arbitration. Meanwhile the other unionized employees such as those in advertising and editing knew that they would be keeping their jobs but feared that the other employees could be just retrained to take over their own jobs.
Management at head office sent daily e-mails to all employees at each of the newspapers and stations to inform them about changes going on during the convergence, which is what they termed the changes. Many of the changes included the integration of administration, the suppliers and couriers among all of the groups and the head office. Management also sent out confidential breakdowns of the generated revenues of the organization and a breakdown of the convergence program issues and what it meant to each group. (Chen, interview)
Management at the Pacific Newspaper group has been holding continuous meetings with employees to discuss, express opinions and update on the convergence issues. Management has also expressed to employees that at some point in the future, the newspaper groups and the stations will integrate more of their resources and communication with each other. (Chen, interview)
When assessing top management today it is important for the skills and the strengths of the management of CanWest to fit into the organizational structure. Mr. Asper believes that they have to make a transformation. He believes that as television operators in Canada Particularly, we’ve been half plant managers managing a technical operation with some program-scheduling people and marketing and sales peoplewe need to bring more creative people into our organization (Interview). Mr. Asper wants to focus on creating more of its own content for CanWest and believes that creative and innovative employees who share the companys vision are needed to accomplish this.
Change of any kind can be very unsettling. These mergers included a change of ownership in the case of the newspapers and online properties, and a substantial diversification in the case of already existing television and entertainment division employees. CanWest studied various case studies and did all of the requisite reading on making good on large mergers and acquisitions. The company worried about the risk of incurring a significant drop in productivity and bottom-line performance as their people adjusted to their new environment. They resolved to move forward cautiously and to keep everything as simple as possible. The company used 12 teams working on 12 specific areas where they believe they can derive the most value, whether by creating new revenue or by cost efficiency.
CanWest fosters a strong management. They believe that managers will deliver the assets and the maximum exploitation of those assets, because if you look across the various groups that evolve, there will be roughly a level playing field. Everybody will own cable channels, everybody will own studios and production companies, and we will have Internet presence. But who is getting the most out of those and what corporate culture is developing around each of these groups that will allow them to get the most out of their assets.
One gets the impression that they look more and more toward controlled companies as opposed to widely held companies because there has to be a boss running the entire show, not many bosses with their say in the organization, this comes across as CanWests philosophy while researching the company. And when you get companies that are widely held public companies, they are usually slower moving and usually develop much greater political forces within them that are hard to overcome to allow a corporation to be nimble and aggressive and quick reactors.
Ravelston, Hollinger’s parent company, has agreed to provide certain management services to the acquired publishing assets for at least 13 months in order to facilitate an orderly transition of management.
The CanWest organization, under the direction of the family patriarch, Izzy Asper, firmly believes in hiring and retaining the best and brightest people, whether that requires building from within or searching the competition for the right mix of talent. Mr. Asper believes that they will be entirely self-contained because no matter how hard you try, you can’t get the 20 best creative people in the world, put them in an office in your business (Interview). Mr. Asper believes that it is important to train and encourage current employees to excel within the company.
Leonard Asper stated that in addition to having as many good creative people in your own company, you have to have people in your company who can recognise the creative talent that is out there floating around. He says that a company should have a very good, aware, hip group of people who know what the next trends are, and people who can spot those and bring them into the corporate environment without dampening the creative genius. (Leonard Asper Speech to the Canadian Media Directors Council April 3, 2001).
CanWests resources are stretched trying to sort out all the media choices advertisers face. The main objective is to complement and be part of the media planning process. This is preferable to being a destination once the planning has been done and the buying process is launched.
CanWest is trying to bring to the viewer a better, more complete product. To reach the same audience, advertisers need more platforms to deliver the messages and ensure they are received, and received in the right environment. TV and print will be the staples but sponsorship, merchandising, banner ads, etc., are also necessary. CanWest is building a company that will provide the data, the platforms, the cross-promotional power and the strategies to sell most effectively.
CanWest believes in strong management. It is necessary that managers will deliver the assets because in the end, if you look across the various groups that evolve, there will be roughly a level playing field. Many companies will be competing on the different media platforms.
CanWest should look more and more toward controlled companies as opposed to widely held companies because, in this day and age, there has to be a boss. And when you get companies that are simply widely held public companies, they are usually slower moving and usually develop much greater political forces within them that are hard to overcome to allow a corporation to be effective.
CanWest has successfully implemented their change strategies. It is obvious that it will take time for any large company that is acquiring new companies and reengineering to pass the turmoil stage of implementation. However, CanWest must continually monitor its change strategy and the effects that it is having on the diverse group of employees. CanWest needs to use employee empowerment as a method to involve employees in the companys changes and to assure them that they are valuable assets to the company. The employees are the key to the success of the organisations success during and after these changes. CanWest must realize this and utilize their most important resources.
CanWests acquisition of Hollingers newspaper and Internet assets, along with Canwests existing television assets makes CanWest Canadas largest daily newspaper publisher and the country’s leading Canadian integrated media company.
Completion of this revolutionary transaction cements the largest ever media convergence deal and positions CanWest as the country’s leader in content and advertising. The power of their traditional media combined with leadership in the new media will be a strong force in the broadcasting and publishing industry.
There are no guarantees that Izzy Asper and CanWest will succeed. CanWest Global is deep in debt and the future of the National Post is still in doubt. The economy has not been great over the last year, and the events of September 11 have had a major impact on advertising revenues for both television and newspapers. The revenues may not match costs, therefore the board of directors may have to watch the groups within the organisation and keep a vigilant eye on spending.
Calgary Chamber of Commerce.
Broadcasting Policy Monitoring Report 2001, October 30, 2001 http://www.crtc.gc.ca/ENG/NEWS/RELEASES/2001/r011030.htm
Attention Business/Financial Editors.
David Asper in his address to the Calgary Chamber of Commerce April 20, 2001.
Leonard Asper Speech to the Canadian Media Directors Council April 3, 2001. http://www.canwestglobal.com/pressroom/archive/050301.html
Notes For An Address To The Canadian Club of Toronto. http://www.canwestglobal.com/pressroom/archive/100101.html
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Notes For An Address To The Canadian Club of Toronto Toronto October 1, 2001Leonard AsperPresident and C.E.O. CanWest Global Communications Corp.
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Interview with Leonard J. Asper.
CanWest Announces Initiatives to Accelerate Growth, Debt Reduction.
Chen, Emily. Telephone Interview. Employee at Pacific Newspaper Group. 5 Dec. 2001.