The Hook

This is a memo circulated Wednesday by Leonard Asper, president and CEO of Canwest Global Communications Corporation. It comes in the wake of reports that Canwest had filed for bankruptcy protection.

Sent: Wed 10/7/2009 4:50 PM

To: All Canwest Staff

Subject: Memo from Leonard Asper - Business Update

Yesterday was a stressful day for everyone, and I would first like to thank each of you for your focus and professionalism as efforts were made across all areas of the Company to stabilize the business.

As expected, there were a lot of stories about Canwest in the media today, including a great deal of speculation about the Company. This is no surprise given that these media outlets are our competitors, but it has caused some concern for some employees and I would like to take this opportunity to clear up the misinformation. First, let's talk about what is NOT happening:

•Canwest is not bankrupt; it is in creditor protection that will provide the time and stability to implement a financial restructuring plan that has the support of our major creditors.

•We are not contemplating a fire sale of any of our broadcasting assets, nor are our major debt holders. They see the value in keeping the business together and are supporting a restructuring plan that sees a strong broadcasting business emerging in four to six months.

• We are not in danger of having to surrender our programming rights. We have strong relationships with the major US studios and Canadian independent production companies and in conversations with them over the last two days they have signaled their confidence in Canwest. The studios want us to carry their shows in Canada and we have assured them that through the filing process, we have funding to purchase it. That's great news for viewers who have already signaled that they approve of our strong slate of programming on Global and our specialty channels.

•We are not going to fall short on our Canadian content obligations to the CRTC. As I said yesterday it is business as usual, and that includes meeting the expectations of our regulator. We have met with the industry and confirmed this with them.

Media speculation and sensationalism aside, we are receiving some very positive and encouraging feedback in our conversations with stakeholders - the people that count, and the people whose support will play a big part in getting us through this process. Peter Viner, Dennis Skulsky and I have been working with our broadcasting, publishing and digital sales teams to reach out and talk to our advertisers and here's what some of our clients and senior agency partners are saying:

"I'm not worried,'' said one agency. "It's a financial balance sheet issue. You have great brands."

"The risk isn't with the advertiser; you'll still deliver the same audience,'' said another agency. "There's no reason not to continue with you. We know who our partners are! You've helped us. It's business as usual."

"It's clear to me that there is a pre-determined outcome that's positive," said a third agency.

"So the presses will continue you run?" said a major advertiser.  "Yes," we replied. "That's all I need to know," they replied.

Our partners continue to recognize that Canwest has strong brands that are valued by advertisers and this financial restructuring process is not going to change that.

While we have done our best to anticipate as many of your questions as possible, there have been a few that have come in over the last 24 hours that I would like to address.

•A top concern among all of our employees yesterday was how our creditor protection filing will affect past employees. Canwest currently has approximately 60 former employees on salary continuance. These payments were stayed or frozen by this filing so they were negatively affected. They will, however, have the opportunity to recoup at least a portion of this amount through the claims process. How big that portion is will be determined when the Company emerges from CCAA. Although the numbers are small relatively speaking, we sincerely regret the impact to them. One of the reasons that this financial restructuring plan has taken as long as it has to come together is that we've carefully considered every decision to minimize negative impacts on our stakeholders where possible, while working to ensure we preserve the value and viability of the business and protect as many jobs as possible in the long term.

•Another question that I have heard in the hallways is what the difference between Canwest and Nortel is. Employees point out that when it filed for creditor protection, Nortel said that it was the beginning of a new company. We have all seen how this has turned out and these employees are wondering what makes Canwest's situation different. There is, in fact, a big difference between Nortel and Canwest. Nortel did not have a prepackaged filing - they went into CCAA without a restructuring plan, without the support of their debt holders and without any Court approved funding. At Canwest, our restructuring plan has the support of more than 70% of our senior debt holders, we have up to $100 million in Court approved funding and $65 million in cash reserves. We are using creditor protection to implement a plan that has the support of our debt holders.

•Many of you have also asked what will happen to the Company's common stock. As expected, following yesterday's announcement, the Toronto Stock Exchange suspended trading of Canwest stock and put its continued listing up for review. This is not uncommon when a publicly traded company enters a CCAA filing. We remain confident that we have a good argument for keeping the company listed. For legal reasons, we cannot comment further on the future value of our stock. If you hold Canwest stock, you should consult your financial advisor for more information on your personal portfolio.

There's no doubt that you will continue to hear a great deal of speculation about the future of our company and will have further questions in the coming months. We are committed to communicating with you throughout this process and in addition to providing regular email updates, there is a great deal of information being posted on the CMI Restructuring site on Canwest Connects and on the corporate website. If you visit the public site you will also find a video I recorded for stakeholders that explains why we have chosen to enter creditor protection and how we believe this decision will benefit the business. It is available for viewing at http://www.canwest.com/about/restructuring.asp.

In addition, we will also be holding our Town Hall next Wednesday where we will answer as many questions as we possibly can that have come in from staff across the country.

In the meantime, I would like to keep the two-way communication going. Keep sending your questions in, whether it is through email at letterstoleonard@canwest.com or by way of your manager. We have a lot of work ahead of us but I remain confident that we have the people, the relationships and the strong brands behind us to successfully emerge and become an even more powerful industry player.

Leonard

David Beers is editor of The Tyee.