Media Union considers challenging CanWest sale

Canada's largest media union wants to challenge a sale of CanWest's newspapers to an ad hoc committee of bondholders. The problem is: this committee is mostly based in the US. Peter Murdoch, the vice-president of Media, for Communications, Energy and Paperworkers Union of Canada, said yesterday:

“We believe this sale will require a review under the Investment Canada Act. Parliament should be acting now to ensure these newspapers remain under Canadian control and ownership. And even if the government chooses to allow this sale to proceed, the level of foreign ownership could trigger provisions of the Income Tax Act that would negatively impact advertisers. The CEP and the 1,700 Canwest newspaper employees we represent will do everything in our power to defend Canadian ownership of this country’s newspapers. Our newspapers are a cornerstone of Canadian democracy and we cannot allow them to become foreign-owned.”

Murdoch also noted that "the Income Tax Act requires a publication to be 75% Canadian-owned in order for the expense of an ad to be deducted from income. Under the terms of the proposed Canwest newspaper sale the so-called Ad Hoc Committee of 9.25% Bondholders will exchange their bonds for 67.5% of the new company’s equity and, according to media reports, the holders of 90% of these bonds are U.S. based."

CanWest and these bondholders will seek court sanction of this sale on Friday.

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