WINNIPEG – Citing CTV’s “programming luck”, CanWest Global Communications CEO Leonard Asper on Wednesday acknowledged Global Television’s meagre performance in 2005 when compared to its closest rival, but said better days are coming.
When it comes to ratings, from which flows the advertising dollars, Global was a laggard in 2004 and 2005 – and changes were made as several executives were shown the door. New programming and marketing people have been brought in, new shows have been purchased and are performing better (My Name is Earl, Prison Break, House, Rock Star INXS, to name a few).
But the light CanWest executives see at the end of the tunnel isn’t approaching just yet, Asper told financial analysts in a conference call Wednesday to discuss the company’s fourth quarter results.
Asper and CanWest MediaWorks president Peter Viner said they think the bottom has been hit in terms of ratings but when it comes to ad revenue and performance, “we’re not confident that we can say 2005 represents the bottom,” said Asper. He told the call that next fall is when the company will see the ratings improvements from ’05-’06 on the balance sheet.
Viner also cautioned analysts that the spot market (near-term ad buys) has not been encouraging so far in fiscal 06. It’s been “softer than anticipated for all conventional TV stations, with the possible exception of CTV,” Viner said. “It’s been a disappointing first quarter to date.”
“We know (Global TV) is a challenged asset in a challenged market,” Asper added later in the call. “In some ways we’re caught in a perfect storm here between the programming luck, I’ll call it, that CTV has had with their ABC output deal (with Desperate Housewives, for example as well as CBS’s CSI and NBC’s Law & Order). We’ve also got an issue with Bell Canada that it has been very aggressive in buying programming and sitting it on the shelf – and we’ve got a weak spot (advertising) market right now (in Q1 2006) so we are looking hard at some solutions.” CTV’s parent company is Bell Globemedia, a Bell subsidiary.
Some of those potential solutions can be found here.
Overall, however, thanks to its newspaper and international divisions, the company had a decent 2005.
For the twelve-month period, net earnings were $10 million or $0.06 per share, compared to a net loss of $13 million or $0.08 per share in fiscal 2004. Earnings in fiscal 2005 were affected by aggregate non-cash charges of $95 million and losses of $189 million associated with interest rate and foreign currency swaps, and foreign currency gains of $76 million.
Excluding the effects of these charges and comparable charges in the prior year, consolidated net earnings from continuing operations net of income taxes, would have been $173 million for the year ended August 31, 2005 and $117 million for the year ended August 31, 2004.
Consolidated revenues were $3.07 billion for fiscal 2005, an increase of 6% compared to consolidated revenues of $2.9 billion the prior fiscal year. Consolidated EBITDA(1) for fiscal 2005 was $720 million, a $3 million increase from consolidated EBITDA(1) of $717 million for fiscal 2004.
The company recorded a net loss of $106 million for the fourth quarter ended August 31, 2005. Net earnings were affected by a number of charges in the quarter including a non-cash charge of $51 million to reflect a write down of goodwill of the National Post. The results were also affected by losses of $109 million related to interest rate and foreign currency swaps and a $12 million charge related to the termination of the Ravelston Management Services Agreement. These charges were partially offset by $47 million in foreign currency exchange gains on the settlement of debt in the fourth quarter. Excluding the effects of these charges, the net loss from continuing operations for the fourth quarter ended August 31, 2005 would have been $9 million compared to a loss of $20 million for fiscal 2004.
Consolidated revenues for the three month period ended August 31, 2005 increased by 5% to $702 million for the quarter, compared to consolidated revenues of $665 million for the fourth quarter one year ago. Consolidated EBITDA for the quarter was $84 million, compared to consolidated EBITDA of $121 million for the same period in 2004. The decline in EBITDA was attributable in part to a total of $12 million in one-time corporate expenses related to the termination of a management services contract with Ravelston Corporation Limited.
Go to www.canwest.com for the full release.
