After filing for banckrupcy protection earlier this month, Canwest Global Communications has announced that flagship daily newspaper, The National Post will probably be forced to close after Friday, if it isn't transferred to a new holding company, Reuters is reporting.

Canwest said a group of creditors led by the Bank of Novia Scotia indicated they no longer wanted to fund continuing losses at the Post, which employs 277 people. The creditor group "will not continue to support funding the National Post Company in the long or short term past Oct. 30, 2009," Canwest said in a court report released on Thursday.

The Winnipeg-based company had its origins in broadcast, but branched out into print when it bought 13 city papers, 126 community papers and 50 per cent of the National Post from Hollinger International in 1999. Canwest later completely aquired the Post in 2001, confirming it as the biggest daily newspaper publisher in Canada.

The sale came on the back of corruption scandals surrounded Hollinger's owner, Conrad Black, who is currently incarcerated. Canwest bought a large part of the media mogul's empire, a move many today consider to be the root of the company's current financial problems. Canwest has consistently lost money on the paper and said: "The National Post Company has been unprofitable since its inception, recording annual losses as high as approximately C$60 million in 2001."

Moving the Post to a different holding company to join its other newspapers not under bankruptcy protection would help to keep its costs down, Canwest says. However, if the application to transfer the newspaper by Oct. 30 fails it "would likely result in the forced cessation of its operations and commencement of liquidation proceedings in respect of the National Post Company."

For the past seven years, the newspaper's losses have been backed by a Canwest subsidiary, Canwest Media Inc and the court filing states that: "As a result, the National Post Company is currently indebted to CMI in the amount of C$139.1 million."

Canwest, like many other news organisations has suffered at the hand of the recession. Newspapers in the US recently posted a collective 10.62 per cent drop in circulation numbers, and advertisers across the globe are observing the figures and choosing to invest their dollars elswhere. Tough financial times have already seen Canwest announce 560 layoffs in November 2008, but a year later the cost-cutting does not appear to have stretched far enough for creditors to continue funding the ailing National Post.

Source : Reuters