How these employees saved CHEK News after buying it for $2
by Claire Brownell, FinancialPost.com | June 5, 2015 5:05 PM ET
Chad Hipolito For National Post
CHEK News chairman, Levi Sampson, in the master control room. Sampson played a major role in convincing Canwest and its bondholders to hand over the Victoria, B.C. station for a toonie, plus $2.5 million to cover operating losses while CHEK rebuilt its programming schedule from scratch.
For Tess van Straaten, life was looking good in the spring of 2009.
After 14 years building her career away from her hometown of Victoria, B.C., she was finally back. She had landed her dream job anchoring the weekend newscast for CHEK, the local station she had grown up watching.
A couple of weeks after starting the job, a reporter from the local newspaper got in touch for an interview.
“The reporter asked, ‘Aren’t you worried about the station closing down?’” van Straaten said. “I had no idea what she was talking about. What do you mean they’re going to close the station down? They can’t close the station down.”
It’s the will of the employees
Van Straaten was right – in the end, the station’s embattled former owner Canwest Global Communications Corp didn’t close the station down. But it wasn’t for lack of trying. Soon after that interview, Canwest issued layoff notices to CHEK employees and gave notice of plans to shut the lights off on Aug. 31, in order to satisfy bondholders as the now-defunct Canadian media giant fought to avoid financial collapse.
But five-and-a-half years later, CHEK is still chugging along, with more local programming, less funding and no major media conglomerate with other sources of revenue to fall back on. The station may not be printing money – all news director Rob Germain would say about the state of CHEK’s finances is that there’s “no imminent threat of shutting down” – but the fact it’s around at all is an achievement, given the uncertain future for local television across the country.
CHEK’s employees saved the station by buying it. With the help of then-28-year-old entrepreneur Levi Sampson, who had played a major role engineering a similar employee buyout of a mill in Nanaimo, they pooled their money, found other investors and convinced Canwest and its bondholders to hand over the station for a toonie, plus $2.5 million to cover operating losses while CHEK rebuilt its programming schedule from scratch.
“It’s the will of the employees,” Sampson said. “How badly they wanted to save that station, how they truly believed they could make a go of it as an independent station in this country.”
When it became apparent no buyers were coming forward and Canwest wasn’t looking very hard to find one, Germain asked Sampson for some advice. CHEK had covered the employee-led purchase of Nanaimo’s Harmac pulp mill the year before and was wondering if Sampson could help the station do something similar.
Sampson met with CHEK’s employees, who were immediately enthusiastic about the idea. With about two dozen employees at the time, all but seven committed to a buy-in price of $15,000 for each full-time worker, adding up to a 25 per cent stake for employees.
Fans of the station flooded Canwest’s offices with phone calls and letters of support for the sale. Canwest was dealing with its own crisis, however, and not everyone had patience for the campaign. The company rejected the group’s first offer.
The employee-led team got some behind-the-scenes help making its next move from an unlikely source: Canwest’s then-chief executive Leonard Asper. While members of the community were blasting the media giant for being heartless, Asper was quietly helping CHEK employees hire a lawyer and prepare an offer that would be more acceptable to bondholders.
“You have a tornado going on in the company, a bunch of creditors trying to enforce their ability to take away the company… you have a corporate office that’s very distracted trying to manage all these different interests,” Asper said in an interview Friday. ” It’s just a very clinical, non-personal view. It’s capitalism in its rawest form at work. There’s no human element to it.”
Eventually, the bondholders came around and accepted the bid, saving the station at the very last minute. Asper remembers it as a bright spot during a dark time.
“I feel great about it. It was great to see the right thing happen to people,” he said. “We were able to stem the tide and stop this machine from just destroying everything in its wake. It was one of the proudest moments a lot of us had.”
Today, CHEK faces the same challenges as the rest of the industry. According to data released by the Canadian Radio-television and Telecommunications Commission, Canadians of all ages watched less traditional television in 2013 than they did the previous year, with Internet television viewing increasing 46% over the same period.
Fewer viewers means fewer advertising dollars. Private stations suffered a 7.2 per cent revenue drop in 2014 to $1.8 billion from $1.94 billion the previous year, largely because advertisers spent $117.1 million less on local television, according to the CRTC.
If the company does well, we do well
Vertically integrated telecommunications companies like BCE Inc. and Rogers Communications Inc. don’t lose out entirely when viewers switch from cable to the Internet because they sell those viewers broadband as well. That’s not the case for a station like CHEK, which relies on advertising for revenue.
Justin Nielson, a senior research analyst at SNL Kagan who covers the television industry, said being small and local can work in an independent station’s favour. Viewers in small markets have fewer options for getting local news, which means a regional station can command a larger share of available advertising dollars.
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