DARTMOUTH, N.S. – Thanks to its growing operations (acquisitions and new license launches), Newfoundland Capital Corporation reported a very strong second quarter of 2006.
Revenue growth was 17% in the second quarter, ended June 30th, climbing to $24.5 million in the quarter and 18% to $43.1 million year-to-date; a result of the incremental growth from acquisitions and new station launches, said the company.
Assets acquired in 2005 that are now contributing to the bottom line in 2006 include the company’s acquisition of three radio stations and two TV outlets in Lloydminster, Alberta, an FM radio licence in Thunder Bay, two FM stations in Red Deer, and a station in Winnipeg. As well, the company launched four new FM stations in Alberta throughout 2005, a new FM licence in Fredericton, New Brunswick in July, and one in Ottawa, Ontario at the end of December.
EBITDA increased to $11.7 million in the quarter compared to $6 million last year, and $14.9 million year-to-date as compared to last year’s $9.1 million. "This is principally due to $8.7 million in investment gains," reads the release.
Net income was $7.5 million in the quarter, $4.4 million ahead of Q2 2005. Year-to-date net income of $8.7 million was $4.1 million higher than a year ago.
"This quarter benefited significantly on the operating front from investment gains," said company president and CEO Rob Steele. "Our goal continues to be growing our overall operating margins. We continue to focus the company’s energy and resources on creating compelling, engaging and entertaining content that drives audience share, increases revenues and leverages higher margins. Competition is also increasing rapidly within the radio industry through new licencing and satellite radio. This means radio operators like us must look to aggressively innovate on content development and continually look for new revenue generating opportunities".
Newcap is a small and medium market radio broadcaster with 74 licences across Canada.
In the second quarter of ’06, Newcap launched two of its recently awarded FM licences, followed by a third in July, and completed the previously disclosed purchase of CKJS Limited in Winnipeg Manitoba. It also was awarded a new FM licence in Calgary, Alberta. New acquisitions and licence approvals in 2006 include (all have been previously reported by Cartt.ca):
* January 18, 2006 – awarded a new FM radio licence in Lac La Biche, Alberta. This is the first commercial radio station to serve this community and is expected to launch in 2007.
* March 10, 2006 – awarded full-station status, from repeater status, in Bonnyville, Alberta which allows the Company to originate and broadcast from that community. KOOL-FM, featuring contemporary hits, was launched in May.
* March 23, 2006 – the Canadian Radio-television and Telecommunications Commission (CRTC) approved the purchase of CKJS Limited which holds the CKJS-AM broadcast licence in Winnipeg, Manitoba. The transaction was completed April 30, 2006 for aggregate consideration of $2.3 million.
* March 24, 2006 – awarded an FM radio licence in Charlottetown, Prince Edward Island and a conversion of the Company’s existing station, CHTN-AM, from an AM to FM signal. The new FM stations, Ocean-FM and K-ROCK, were successfully launched in June and July, respectively.
* August 2, 2006 – The company was successful in its application to the CRTC for a second FM licence in Calgary, Alberta. The new station, Café 90.3 FM, the first adult alternative format to be broadcast in Canada, will be a perfect complement to the existing station, California 103.
As a result of these new broadcast licences, the Company is committed to funding Canadian Talent Development (CTD) totalling $8.2 million over a seven year period.
The company identified Edmonton, however, as a particular challenge.
"Over the past twelve months, four new radio stations have entered the Edmonton radio market where the company has two FM radio stations," says the release. "They have affected all stations in terms of audience share and revenue. The company has been specifically affected by a major format change on its CKRA-FM station. The station, formerly in a top 40/Youth based format, changed to a country music format last December. This was the result of two of the new stations targeting the youth radio market. Although this format change has negatively affected revenue through the first half of 2006, the company is encouraged by increasing audience share of CKRA-FM in the adult 25-54 demographic and the improving sales for the station.
"The company’s other Edmonton FM station, CIRK-FM, has also been affected by the additional competition," the release continues. "The station’s audience ratings were lower in the winter bureau of broadcast measurement audience survey but rebounded higher in the spring survey. The audience loss by CIRK-FM in the first and second quarters of 2006 translated into lower sales revenues during the period. Management is encouraged by the increased audience share the station received in the latest survey and the increased revenues and forward bookings as a result.
