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The oddest of couples in Canadian media is coming unstuck, as CanWest Global Communications Corp. accuses partner Goldman Sachs & Co. of acting in bad faith over the stable of specialty television networks the two companies jointly own.

What was once a promising relationship between Canada's largest media company and the Wall Street powerhouse is now dominated by mistrust, new court filings show. CanWest is asking an Ontario judge to bless measures that strengthen its hold on 13 profitable TV channels, including Showcase and History Television, on fears that Goldman will sell what CanWest called its "crown jewels." The investment bank is challenging CanWest's legal manoeuvres, to maintain its influence.

And the Winnipeg-based company revealed that it tried repeatedly, but unsuccessfully, over the past year to rework what it now sees as a sweetheart deal done with Goldman, cut back in 2007 when CanWest bought Alliance Atlantis Communications.

The previously private battle is now public because both CanWest and Goldman are in court attempting to establish their claims on the specialty TV unit, called CW Media.

Under the terms of the 2007 deal, Goldman gained the power to sell CW Media once CanWest filed for creditor protection in October. While sources close to Goldman say the investment bank is content not to sell right now, and still backs CanWest chief executive officer Leonard Asper, there are interested buyers: Astral Media Inc. has repeatedly said would bid on the division, which showed a $129-million profit over the past nine months. Goldman owns 36 per cent of the votes in CW Media and 65 per cent of the equity.

CanWest president Thomas Strike said in a court filing that sale of the specialty unit would be "disastrous" for the company and its creditors. He said: "Even the overhanging threat of a sale of [CW Media]is adversely affecting the negotiation of a successful restructuring."

Goldman, on the other hand, complained in court filings that its offers to assist CanWest prior to and during the restructuring have repeatedly been rebuffed. The investment bank offered to recapitalize CanWest back in March with a deal that would have seen Mr. Asper maintain a significant stake in the company founded by his father. October's court filing effectively wiped out the Asper family's holding.

However, Mr. Strike said Goldman's offers of aid contained far more upside for the investment dealer than they did for cash-strapped CanWest. According to the media executive, CanWest first approached Goldman last February with a plan to redo the 2007 ownership agreement on CW Media "to reflect 2009 economic market conditions," and Goldman rejected the overture.

In March, Goldman came back to Mr. Strike and his colleagues with a counter-offer "that was, if anything, more one-sided in their favour than the current shareholders agreement" at CW Media. That bid was also turned down, paving the way for the filing for creditor protection, seven months later. Mr. Strike said the media company's aim is to restructure in the manner that serves all stakeholders, and that Goldman's legal broadsides have been "enormously disruptive" and "very destabilizing."

Goldman "may well be unhappy with the way their relationship with [CanWest]has developed," said Mr. Strike. "In that regard, they are not alone."

CanWest and Goldman are expected to eventually appear before an Ontario Superior Court judge to resolve their differences; no date has been set for a hearing.

CanWest is also trying to find a Canadian investor willing to commit up to $65-million to complete the refinancing of the company; Mr. Asper has offered to contribute up to $15-million to that financing package.

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The 'crown jewels'

CW Media's 13 specialty TV channels:

BBC Canada

BBC Kids

Discovery Health Channel

Fine Living

Food Network Canada

HGTV Canada

History Television

IFC Canada

National Geographic Channel

Showcase

Showcase Action

Showcase Diva

Slice

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:10pm EDT.

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Goldman Sachs Group
+0.59%417.69

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