From Globe and Mail Update (posted Oct. 20):

With advertising down at its newspapers and contributions from its Australian television holdings fading, TD Newcrest says CanWest Global Communications Inc.'s shares aren't worth the risk.

“Given that the equity value has been virtually wiped out and considering the poor visibility of the future value of the company ... we have reached a point where the risk/reward does not work for us,” analyst Michael Elkins wrote in a note to clients Monday.

Mr. Elkins cut his rating to “reduce” from “speculative buy,” and dropped his 12-month price target to $1 from $3.50. Eleven analysts follow the shares, according to Bloomberg, with an average 12-month price target of $2.16. ....

“We expect the fundamental environment for CanWest to be very challenging for the foreseeable future,” Mr. Elkins said. “Conventional television remains under secular pressure in our view as do major market daily newspapers. We doubt that online products can grow fast enough or large enough to offset expected declines in the legacy businesses.”

The analyst doesn't think CanWest is in imminent danger of collapse, but it does note challenges on the horizon, such as some major debt repayments due in 2012 and capital expenses down the road.

(h/t to Warren Kinsella)