WINNIPEG – CanWest Global Communications said today that positive financial results in its second quarter report released Friday were due in part to better performance from its Canadian TV and South Pacific operations.
CanWest president and CEO Leonard Asper said second quarter results were “positive, continuing to show a turnaround for Canadian television operations and EBITDA growth for our publications and interactive operations in a tough print advertising market, as well as improved performance in the South Pacific.”
Financial statements for the second quarter and six months ending Feb. 28, 2007 showed second quarter consolidated revenues increased by 7% to $692 million, compared to $645 million for the same period last year.
Consolidated EBITDA for the second quarter increased 10% to $90 million from $81 million for the same period last year, consolidated net earnings were $7 million or $0.04 per share for the second quarter compared to a net loss of $19 million or $0.11 per share last year.
Revenues for Canadian television operations rose 8% to $166 million, reflecting increased advertising revenues as a result of an improved program schedule; second quarter results reflect the seasonality of advertising revenues which are typically highest in the first and third quarters, said a CanWest statement.
Publishing revenues were flat as compared to the prior year, reflecting a soft print advertising market bolstered by growth in the Company’s online classified revenues (up 30% as compared to the prior year). Circulation was flat as slightly lower circulation volume was offset by price increases in several markets.
New Zealand operations registered revenue and EBITDA growth. Combined revenue for radio and television operations increased by $3 million or 8% to $48 million for the second quarter as compared to the same period last year. Combined EBITDA increased by $1 million or 16% to $10 million for the quarter.
Revenue for Network TEN, the Company’s Australian television operations, increased by 14% to $138 million while EBITDA increased by 15% to $37 million. These positive results are attributed to record 2006 television audience ratings and a strengthening advertising market in that country.
Eye Corp, Ten’s outdoor advertising subsidiary, recorded revenue increases of 37% to $35 million for the second quarter. EBITDA was negatively impacted, as expected, by development and start-up costs related to Eye Corp’s entry into USA shopping mall and European airport operations, which are already demonstrating their potential.
Results from the Company’s Australian and New Zealand operations (which are currently for sale) were also affected by their strengthening currency relative to the Canadian dollar.
For the six months ended Feb. 28, 2007, consolidated revenues were $1,553 million, representing an increase of 4% over the same period last year. Consolidated net earnings were $73 million or $0.41 per share, compared to consolidated net earnings of $11 million or $0.06 per share for the same period last year.
Among the second quarter highlights, the company said, was the deal reached in January between CanWest and GS Capital Partners, a private equity affiliate of Goldman, Sachs & Co., to form a new acquisition company to enter into a definitive agreement with Alliance Atlantis Communications Inc. to acquire all of its outstanding Class A voting and Class B non-voting shares at a purchase price of approximately CDN$2.3 billion of which CanWest will contribute $200 million in equity.
On April 5, 2007, Alliance Atlantis shareholders approved the plan of arrangement. The Company expects the transaction will close in late July or early August. At closing, Alliance Atlantis will be reorganized into three divisions and CanWest will retain an appropriate 29% economic interest in the specialty television operations.
In Canada, CanWest’s release noted Global Television had three of the top 10 shows in the three metered markets, including Survivor, House and Prison Break.
The company is also preparing to launch its second FM radio station in the UK in Bristol, England and during the second quarter CanWest was awarded a third radio licence for Aberdeen, Scotland. As well, CanWest has joined with UK television Broadcaster Channel 4, as a content provider, in an application for a national digital radio multiplex.
“We remain optimistic that we will continue to see improvement in our financial results for the remainder of 2007,” Asper said. “We are well positioned in the South Pacific, where we continue to pay careful attention to costs and make strategic investment in new programming. We expect to see ongoing improvement in results for our Canadian television operations reflecting the improved performance of our program schedule which will be tempered by a difficult Canadian conventional television advertising market.
“Our Canadian publishing operations are also affected by a challenging market, however, we expect to continue to benefit from our cost containment initiatives, as well as from growth in online advertising and from the increased sale of non ROP print products such as inserts.”
