DARTMOUTH, N.S. – A recently settled lawsuit led to a third quarter loss of $1.2 million at Newfoundland Capital Corporation.
While revenue grew at a good clip, thanks to organic ad sales growth and acquisitions, a lawsuit settled with Halterm Income Fund for $3.5 million led to the quarterly loss. Excluding the impact of the settlement, net income would have been on par with the third quarter of 2004. Year-to-date net income of $3.3 million is lower than the prior year due to the settlement and the gain on disposal of investment in 2004. Excluding these two one-time events, net income would have increased by $1.5 million or $0.13 per share.
Revenue in the third quarter continued to grow, a continuation of a year-long trend, said the company’s press release. Consolidated revenue was $19.4 million in the quarter ended September 30th, a 20% improvement over last year’s results. The $56 million in year-to-date revenue was 18%better than the same period last year.
The increases are due to a combination of same station (organic) growth and new revenue from the acquisitions in Thunder Bay, Ontario and Lloydminster, Alberta and the new station launch in Fredericton, New Brunswick. Because the purchase of Red Deer, Alberta operations was completed at the end of September, it does not contribute to this quarter’s results.
National and local advertising sales have been strong, in the industry as a whole, over the last nine months, continued the release. The increase in demand for radio advertising has benefited Newcap in terms of increases in both local and national sales. In particular, revenue growth at the company’s Ottawa, Ontario station (Hot 89.9) continues to outpace the industry due to the strong demand for its inventory.
Operating expenses of $16.1 million in the quarter and $44.7 million year-to-date were $3.1 million and $6 million higher than the same periods last year. About half of these increases were a result of operating expenses related to the integration of the new Thunder Bay and Lloydminster operations and the newly launched Fredericton licence. Additional expenses associated with moving to new premises were incurred in Edmonton, and Charlottetown.
"Operations continued to perform well this quarter with EBITDA ahead of last year,” said Rob Steele, president and CEO. “The net loss in the third quarter is a result of the Halterm settlement, however, the settlement of this long-standing contingency clears the way for management to focus on core operations. In the fourth quarter management will concentrate its efforts on the two new station start-ups in Fredericton, New Brunswick and Ottawa, Ontario as well as the integration of the Red Deer, Alberta acquisition."
The company has a purchase agreement awaiting CRTC approval for broadcasting assets located in Winnipeg, Manitoba. A decision on this is expected in the fourth quarter. The Company has also made a presentation to the CRTC for a new FM licence and a conversion of an existing AM to FM in Charlottetown, Prince Edward Island. Results from the hearing are expected to be announced early in 2006.
Newfoundland Capital Corporation is one of Canada’s leading small and medium market radio broadcasters with 69 licences across Canada.
