TORONTO – As expected and predicted, CHUM Limited is seeing softer results in the second half of fiscal 2006, the company announced today.
Of course, the whole industry is focused on the bid to purchase the company for $1.7 billion, but CHUM also reported its third quarter results Wednesday.
Consolidated revenue in the third quarter, ended May 31st, increased marginally to $176.2 million from $175.5 million in the third quarter of last year. Consolidated EBITDA in the quarter decreased by 3.8% to $46.1 million compared to Q3 ’05. For the nine months ended May 31, 2006, revenue increased 7.9% to $515.4 million from $477.4 million and EBITDA increased 7.8% to $114 million from $105.8 million compared with the corresponding period last year.
CHUM’s net earnings in the third quarter decreased marginally to $22.5 million from $23.4 million in the third quarter last year. For the first nine months of this year, net earnings increased 11.3% to $52.7 million over last year’s third quarter.
In an interview Wednesday, Switzer told Cartt.ca that the company’s conventional stations had a strong first half of the year, based on ratings estimates which were aggressive due to the new programming (like Everyone Hates Chris and Monday Night Football) last fall. However, the predicted ratings never materialized.
"If you don’t meet your estimates, you work with your advertisers – you have their money already – and work in ways to meet their needs and solve their problems," he said, "and you revise your rates to better match the actuals for the back half."
Advertising on the specialty side was lower than expected, added the CEO, but distribution revenue was better than hoped. For the third quarter and first nine months of fiscal 2006, television revenue increased 0.5% and 9.4%, respectively, compared with the corresponding periods last year. Advertising revenue for the company’s specialty television stations (MuchMusic, Bravo!, Drive-In Classics, etc.) for the third quarter decreased 4.8% and subscriber revenue increased 7.2% over the corresponding period last year.
For the first nine months of this year, advertising revenue for the company’s specialty television stations increased 3.2% and subscriber revenue increased 9.5% compared with the corresponding period last year. Advertising revenue growth for the company’s specialty channels was lower in the third quarter compared with the same period last year primarily as a result of the return of NHL Hockey and the Winter Olympics.
In his conference call with financial analysts, Switzer named Bravo! as a serious problem, saying it needed special attention. "We knew (Bravo) was going to be soft but its performance has not lived up to our expectations," said Switzer, who said he hoped the addition of HBO program Entourage will help. Bravo has suffered ever since the cancellation of the top-rated Sex and the City.
"You’re going to see a refreshed and rebuilding Bravo," he added.
The soft ad market isn’t peculiar to CHUM. Said Switzer: "There are some challenges across the board for many broadcasters."
Radio has hit its targets so far this year, he said, with a 3.6% boost in revenue over the first three quarters, to $105.3 million and an EBITDA increase of 1.2% to $36.6 million.
