WINNIPEG – Consolidated revenues at CanWest Global communications increased by 7% to $738 million in the third quarter of fiscal 2007, ended May 31st, consolidated EBITDA rose 13% to $122 million but consolidated net earnings were $8 million or 38% lower than last year’s same quarter, the company announced this afternoon after the close of trading.
CanWest, of course, owns Global TV as well as other electronic media assets in Canada and abroad as well as the largest number of Canadian newspapers in the country.
"Results for the third quarter were positive, led by continued growth in publishing revenue and EBITDA and strong growth in Australian television revenue and EBITDA," said Leonard Asper, president and CEO, in the press release. "Net earnings this quarter declined from the same quarter last year, as results last year included recovery of income taxes related to a number of non-recurring items.
Publishing revenues grew 3% as compared to the prior year and EBITDA increased by 8% to $72 million for the quarter as a result of continued cost containment initiatives and revenue growth in inserts and retail advertising. Expenses decreased significantly due to the impact of the discontinuation of the print version of Dose and related severance costs in the third quarter of 2006, and as the result of strong cost controls overall.
Revenues for Canadian television operations (Global TV, TVTropolis and a few others) decreased 3% to $182 million, "reflecting the industry wide softness in conventional advertising sales," reads the press release. Revenues for the nine month period increased 5% over the prior year and third quarter Canadian television expenses decreased by 7%, primarily due to reduced program amortization expenses and management’s continuing commitment to improve operating efficiencies.
And, "with respect to the fourth quarter, we’re continuing to see softness," added CanWest’s TV president Kathy Dore on a conference call with the financial community Thursday. And come fiscal 2008 (beginning September 1st), expect low to mid-single digit percentage increases in revenue, she added.
As a result, EBITDA for Canadian television increased by 27% to $31 million for the third quarter of 2007 as compared to the same period last year.
The sale of CanWest MediaWorks (New Zealand) Limited was completed subsequent to
the end of the third quarter and accordingly has been reported as a discontinued operation. Aggregate proceeds on the sale of $307 million were received in June 2007 and were used to repay advances under the revolving term credit facility. A net gain of approximately $239 million is expected to be reported in the fourth quarter.
Revenue for Network TEN, the company’s Australian television operations increased by 21% to $180 million while EBITDA increased by 34% to $29 million. These positive results reflect strong ratings performance in a stronger advertising market and a stronger Australian currency relative to the Canadian dollar. Comparatives for the third quarter of 2006 were impacted by the Commonwealth Games.
The company also reminded investors of its pending acquisition of Alliance Atlantis In April, shareholders of Alliance Atlantis approved the arrangement agreement under which AA Acquisition Corp., a corporation formed by CanWest and GS Capital Partners VI, L.P., a private equity affiliate of Goldman Sachs and Co., will acquire all of the outstanding Class A and Class B shares of Alliance Atlantis for $53 cash per share. In addition, the Plan of Arrangement cleared Canadian Competition Bureau review and was approved by the CRTC.
Upon the completion of the transaction, expected before the end of the year, given that the hearing is set for September 5th, CanWest will invest approximately $200 million and will hold an approximate 29% economic interest and a 66 2/3% voting interest in the specialty television operations previously owned by Alliance Atlantis.
