Arbitrator Boots CanWest From 'Jerusalem Post' Deal

By: E&P Staff CanWest Global Communications Corp., Canada's largest daily newspaper chain, said an arbitrator has denied its claim that it is entitled to purchase a 50% interest in The Jerusalem Post.

When the paper was sold by Chicago-based Hollinger International Inc. in 2004, the terms of the $13.2 million deal called for its ownership by a joint venture between CanWest and Mirkaei Tikshoret Group (MTG), Israel's largest media company.

After the sale to MTG closed, though, CanWest and MTG, which is controlled by the prominent Israeli businessman Eli Azur, could not reach an ownership agreement between themselves.

In the arbitration before the New York City-based International Center for Dispute Resolution in New York, CanWest argued MTG had breached its obligations under the joint purchase agreement. MTG argued that the two sides never reached a binding agreement.

According to a statement released by CanWest, the arbitrator found that the parties had entered into a binding agreement in good faith on a joint venture to acquire the Jerusalem Post and some related properties. "The arbitrator further found that Mr. Azur refused to reaffirm the parties' agreement that CanWest and MTG would each own a 50% interest in the newspaper," the CanWest statement continued. "However, he concluded that this did not constitute a breach of the agreement."

CanWest President and CEO Leonard Asper said the company was "extremely disappointed" with the decision, which he said included an "apparent inconsistency."

"On one hand, he found that MTG refused to accept the fundamental tenet of the agreement which provided for the parties to each own an equal interest in the newspaper but somehow concluded that this did not constitute a breach of the agreement to negotiate with us in good faith," Asper said in a prepared statement.

CanWest said it is reviewing the decision and considering its options.

In addition to publishing daily newspapers in Canada, CanWest owns or controls numerous broadcast, cable and radio operations in Canada, New Zealand, Australia, Ireland, Singapore, Malaysia, Turkey and the United Kingdom.