MONTREAL – Partially led by the growth of Videotron’s new residential telephone service (at 41,800 customers at the end of June), Quebecor Media posted gains in revenue and operating income.
Revenues at the division (which also houses TVA and Sun Media, among other assets) grew by $56 million to $692 million and operating income increased by $1.8 million.
Overall, Quebecor Inc.’s revenues (which includes its huge, global printing company) decreased by $89.9 million (-3.5%) to $2.51 billion in the second quarter of 2005. The 9.1% revenue increase at Quebecor Media Inc. did not entirely make up for the decrease at Quebecor World Inc., due mainly to the unfavourable impact of the conversion of its results into Canadian dollars, says today’s press release.
Overall operating income declined by 11.1% to $396.2 million. “Because of the unfavourable impact of the devaluation of the U.S. dollar between the second quarter of 2004 and the second quarter of 2005, the US$25.9 million decrease in Quebecor World’s operating income translated into a $53.1 million decline when stated in Canadian dollars. Quebecor Media’s operating income increased by $1.8 million (0.9%) between the second quarters of 2004 and 2005,” reads the release.
"Quebecor Media’s operating results continued trending upward, driven by customer growth and successful development of new products and services," said Pierre Karl Peladeau, president and CEO of Quebecor Inc.
"However, Quebecor’s revenues and operating income were impacted by the conversion of Quebecor World’s results into Canadian dollars, as well as the effect on Quebecor World’s operating results of challenging conditions in print media markets. Quebecor World continued its restructuring program and pressed ahead with its long-term investment program in order to improve the performance of its manufacturing platform. It also decided to focus on its core business
Quebecor Media’s quarterly net income increased by $18.5 million to $35.4 million, compared with $16.9 million in the same period last year. Quebecor World reported a net loss of US$7.8 million (US$0.06 per basic share), compared with net income of US$ 6.6 million (US$0.05 per basic share) in the same quarter of 2004.
In the second quarter of 2005, the cable segment (Videotron) increased its revenues by $28.8 million (13.6%) and its operating income by $3.9 million (4.3%), primarily as a result of customer growth and improved service profitability. The revenues of Le SuperClub Videotron ltee rose by $2.7 million (26.7%) and its operating income by $600,000 (23.7%) due to the favourable impact of the acquisition of Jumbo Entertainment Inc. and higher retail sales.
The customer base for illico Digital TV grew by 25,800 in the second quarter of 2005 to 381,000, while the number of customers for all cable television services decreased by 11,900 during the quarter. Cable Internet access services registered customer growth of 18,000 to a total of 548,000 customers. At the end of the second quarter, the residential telephone service had 41,800 customers, an increase of 26,900 from the previous quarter.
Videotron’s net monthly ARPU (average revenue per user) increased by $4.83 (10.5%) from the same time last year to $50.86. Free cash flow from operations was $62 million, compared with $41.6 million in the same quarter of 2004. The $20.4 million increase was mainly due to the favourable variance in the net change in non-cash balances related to operations.
Year to date: Videotron’s revenues up $54.1 million (12.9%) to $473.2 million; operating income up by $23.3 million (14.2%) to $187.1 million.
The Broadcasting segment’s (TVA’s) revenues increased 10.3% to $104.1 million in the second quarter of 2005. Revenues from broadcasting operations rose $5.7 million (7.8%) due primarily to the favourable impact on revenues of the acquisition of Toronto 1 and higher revenues from commercial production and other sources. Distribution revenues rose $3.3 million, driven by the successful video release of the film White Noise. Publishing revenues grew by $1.5 million because of higher advertising revenues and increased newsstand sales.
Operating income decreased by 17.2% to $24.6 million, mainly because of higher programming costs, the operating losses of the television station Toronto 1 and the new specialty channels Mystere and ARGENT, and spending on advertising and marketing in response to competition in the publishing segment.
Year to date: Revenues up 11.4% to $200.8 million; operating income down 25.4% to $31.4 million.
During the period from January 3rd through May 22nd, 2005, 24 of the 30 top-rated shows in Quebec were on the TVA Network. According to BBM People Meter survey results, the TVA Network had a 29% audience share.
The revenues of the Newspapers segment (Sun Media, etc.) were up 2.7% to $239.5 million in the second quarter of 2005. Advertising revenues rose 4.6%, mainly because of larger total volumes. Distribution revenues also rose, while circulation and commercial printing revenues decreased. Operating income was down 4.9% to $61.7 million.
The higher revenues did not entirely offset an increase in operating costs. The operating losses of the free dailies rose by $1 million between the second quarters of 2004 and 2005, mainly as a result of the launch of the Vancouver newspaper. Operating income decreased by $3.1 million (-5.9%) at the urban dailies (excluding the free dailies) and increased by $2.4 million (13.0%) at the community papers.
Between the first and second quarters of 2005, the revenues of the free dailies increased by $900,000. Free cash flow from operations was $34 million in the second quarter of 2005, compared with $47.4 million in the same period of 2004.
Year to date: Newspapers segment’s revenues up $18.7 million (4.3%) to $452.1
million; operating income down 1.1% to $103.4 million.
