Canwest Global Communications Corp. lost $1.4 billion in the three months ending February 28, and wrote off more than half the value of its newspapers.

The Winnipeg-based media conglomerate – which publishes The Vancouver Sun, The Province and The Times Colonist as well as numerous other Canadian dailies, slashed the value associated with those papers by $895 million. Canwest, which last year counted the “goodwill” value of its newspapers at $1.7 billion, now figures that at $788 million.

Canwest Publishing CEO Dennis Skulsky said the company will continue cutting costs at its newspaper operations.

“In terms of taking costs out, there is no finish line to that effort,” Skulsky told a Canwest conference call on Thursday. “We’ve got some cost-saving initiatives that we’re going to be rolling out in Q3 and Q4. There is no finish line to this.”

Earnings at Canwest’s publishing operations were down 46 per cent from the same quarter last year, according to the report. Skulsky attributed those results to what he called “unprecedented declines” in three key advertising categories: employment, real estate and automotive.

“We feel we are well-positioned once the economy comes back,” Skulsky said, noting that The National Post is “performing ahead of expectations.”

Skulsky rejected comparisons between Canwest’s newspapaers and U.S paid daily newspapers—which have been shuttered at the rate of one per week since the beginning of this year.

“We compete against fewer newspapers,” than any US company, he said, adding, “our business relies less on classifieds than they do in the US.” Referring to Canwest’s collection of 80 web sites, Skulsky claimed, “when you add online and print readership, we have a growing audience.”

Canwest's television stations reported similarly difficult results. CEO Leonard Asper said the company was losing money in all but 3 of 16 Canadian broadcast television markets.

Overall, the Winnipeg-based media conglomerate reported a $1.19 billion write-down in earnings as part of financial results for the three-month period ending Feb 28, 2009. After those non-cash restructuring charges, Canwest reported a profit of $75 million for the quarter—a decline of 31 per cent compared to the same quarter in 2008.

Canwest continues to groan under $4.1 billion in debt. The company received a two-week extension on interest payments due to bank lenders on April 7, which appears to have set the stage for a showdown with bondholders next week.

Canwest must make a $30 million interest payment to those bondholders by April 15, or else the boldholders could push the company toward bankruptcy. Canwest has enough cash on hand to make the payment, but its senior creditors—the banks that just granted another two-week extension—are believed to be objecting to any payments that subordinate their claims behind those of the bondholders.

Asper refused to comment on talks with lenders during the quarterly conference call. CFO John Maguire likewise responded to an analyst’s question by stating, “We just don’t want to get into a speculative discussion about what may or may not happen.”

Monte Paulsen reports for The Tyee.