TORONTO – Growth in its broadcasting division as well as the CSI franchise drove a 25% increase in EBITDA (to $48.4 million) for the first quarter at Alliance Atlantis.
Earnings before income tax of $35.4 million increased by 18% compared to prior year’s period, but net earnings of $21.5 million decreased by 7% compared to Q1 2005, primarily due to higher effective tax rate, reports the company.
"We are very pleased with the performances of each of our businesses during the first quarter," said Phyllis Yaffe, CEO, in the press release. "Our broadcasting business recorded solid gains in advertising and subscriber revenue (12% each), and for the second successive quarter, our digital channels made a positive contribution to EBITDA."
"The CSI franchise (the original set in Las Vegas, plus Miami and New York) also continues to perform very well," said Yaffe. "CBS has renewed all three series for the 2006/07 season and we believe the strong ratings in North America and around the world speak to the enduring value of the franchise."
"As expected, the Motion Picture Distribution business got off to a much better start this year. The Canadian operations, in particular, are expected to continue to benefit from a stronger slate including a new long term supply agreement with The Weinstein Company (a popular independent movie house run by the same guys that once ran Miramax)."
Broadcasting revenue of $69.7 million represented an increase of 12% over the prior year’s quarter. Total advertising revenue also increased by 12% compared to last year’s period. Our analog and digital channels recorded 11% and 29% advertising growth respectively. Total subscriber revenue grew 12% over the prior year’s period, with subscriber revenue for our analog and digital channels growing 9% and 22% respectively.
Yaffe also added during the conference call today with financial analysts that the company will launch at least one, "likely two" high definition channels this calendar year. Capex costs to launch will be about $2 million per channel, she added.
In the entertainment segment, CSI revenue of $93.1 was up 4% from $89.8 million in the prior year’s quarter. The increase was primarily due to higher U.S. after sales (including second window cable sales, weekend syndication, and DVD sales) partially offset by a stronger Canadian dollar during the quarter. The negative impact of foreign exchange changes on CSI revenue in the quarter was $5.8 million. The foreign exchange rate for the first quarter of 2006 was $1.15 compared to $1.23 in the prior year’s quarter.
During the first quarter, broadcasting EBITDA of $20.1 million was up 25% over q1 ’05. This represented an EBITDA margin of 29% compared to a margin of 26% in the same period last year. The increases are primarily due to higher revenue as well as continued positive EBITDA contribution from our digital channels, which generated a negative EBITDA contribution in the prior year’s quarter.
"For broadcasting, solid growth in advertising and subscriber revenue is expected to continue for the remainder of the year," reports the company, which owns such channels as Showcase (and its sisters), HGTV, Life, History, National Geographic Canada and others. "Margin percentage for the full year is expected to be similar to the prior year as higher margin percentage for our digital channels is offset by incremental investment in programming and online initiatives."
During the first quarter, two additional digital channels surpassed the one million subscriber mark – BBC Canada and National Geographic. Six of the company’s channels have now reached this level. Showcase Action continues to rank No. 1 among the more than 47 networks launched since the fall of 2001 in adult 25-54 average minute audience and four of Alliance Atlantis’ digital channels rank in the top 10 for Adult 25-54 average minute audience (Showcase Action, Showcase Diva, BBC Canada, IFC).
The company’s analog channels also achieved strong audience results during the first quarter of 2006. Collectively, the networks experienced a 15% increase in average minute audience (AMA) for the Adult 25-54 demographic when compared to the same period in the prior year, says the release.
"This growth occurred during a highly competitive broadcasting schedule that included the Winter Olympics and the return of regular season NHL coverage. Currently, three of Alliance Atlantis’ analog channels (Showcase, HGTV Canada and History) rank in the top 10 for English language Canadian commercial specialty networks and continue to draw record audiences."
Look for the company to move into content distribution on new platforms later this year as well, added Yaffe.
