CanWest Global Communications Corp. - Third Quarter Earnings from
Continuing Operations up 101% EBITDA up 50% at TEN Group,
Publishing EBITDA up 4% WINNIPEG, July 15 /PRNewswire-FirstCall/ --
CanWest Global Communications Corp. today reported its third
quarter financial results, for the period ended May 31, 2004. Net
earnings were $54 million or $0.31 per share, up 335% from net
earnings of $12 million or $0.07 per share last year. Net earnings
from continuing operations for the quarter were $52 million or
$0.30 per share, up $26 million or 101% compared to net earnings
from continuing operations for the third quarter last year of $26
million or $0.15 per share. In its public reporting, the Company
provides revenue and EBITDA on both a consolidated basis and
combined basis. In the consolidated financial results, the Company
accounts for its investment in TEN Group on an equity basis, which
excludes revenues and EBITDA of TEN from consolidated revenues and
EBITDA. The combined results include the Company's 56.6%
proportionate share of TEN's revenue and EBITDA. The Company's
consolidated revenues for the three-month period were $565 million
compared to consolidated revenues of $558 million for the same
period in 2003. Consolidated earnings before interest, taxes,
depreciation and amortization (EBITDA) in the third quarter were
$143 million compared to consolidated EBITDA of $141 million for
the corresponding period last year. Consolidated revenues for the
nine-months ended May 31, 2004 were $1,610 million compared to pro
forma consolidated revenues of $1,603 million for the same period
in 2003. Consolidated EBITDA for the nine months ended May 31, 2004
was $388 million compared to pro forma consolidated EBITDA of $403
million for the same period in 2003. Pro forma results for the
nine-month period in 2003 exclude the revenue and EBITDA
contributions of newspaper assets that were sold in February 2003.
Financial Highlights: Three months ended May 31, 2004: - Combined
revenue increased $28 million or 4% from last year to $682 million
- Combined EBITDA increased $13 million or 8% from last year to
$177 million Nine months ended May 31, 2004: - Combined revenue
increased $75 million or 4% from the pro forma result last year, to
$1,952 million - Combined EBITDA increased $24 million or 5% from
the pro forma result last year, to $506 million Overall,
exceptional results generated by the Company's South Pacific
broadcasting operations, led by the TEN Group, together with EBITDA
growth in Canadian newspaper operations, were responsible for the
increase in combined EBITDA. Leonard Asper, CanWest's President and
Chief Executive Officer, commenting on the third quarter and
nine-month results, said "CanWest moved forward operationally and
on a number of important strategic initiatives in the third quarter
that will help to position the Company for future growth. The
outstanding results at TEN Group and our New Zealand broadcast
assets continue to demonstrate the value of CanWest's position as a
diversified international media company. Our newspaper operations
were successful in recording a significant EBITDA gain in a
difficult Canadian advertising market and results from our Canadian
television operations continued to improve. Fireworks is no longer
a drain on the Company's income statement and we believe we have a
modest but profitable content development strategy. The recent sale
of our stake in Ulster TV and the IPO in New Zealand are consistent
with our long stated objective of monetizing certain of our
overseas assets. Proceeds from these transactions will further
strengthen CanWest's balance sheet. The successful refinancing of
our bank debt in June reduces future financing expense and,
together with certain covenant amendments, further improves the
financial flexibility of the Company." In the combined results, the
Company's 56.6% share of revenues of Network TEN increased by 24%
to $107 million for the quarter, from $86 million reported for the
same period last year. TEN's EBITDA increased by 46% to $31 million
for the quarter, compared to $22 million for the same quarter last
year. TEN's outstanding financial performance was a direct result
of strong ratings, the network's increased share of the television
advertising market and its consistent success in controlling costs.
TEN was again number one in its target audience of 16-39 year-olds
and appears poised to maintain that first place position in its
target demographic for the fourth year in a row. For the first
time, TEN gained second place in the wider 25-54 year-old
demographic in the third quarter, further evidence of the strength
and broader appeal of TEN's schedule. Eye Corp, TEN's out-of-home
advertising division, registered a 16% increase in revenues to $11
million for the third quarter, generating EBITDA of over $2
million, more than double the level recorded last year for the same
period. The Company's TV and radio operations in New Zealand
reported aggregate EBITDA of $11 million for the quarter compared
to $4.5 million for the third quarter last year, a 137% increase.
CanWest's 45% interest in TV3 Ireland's EBITDA was $3 million for
the quarter, 9% higher than for the third quarter of 2003.
Publishing EBITDA increased by 4% to $74 million compared to $72
million for the corresponding quarter last year on quarterly
revenues of $300 million, which were unchanged from the
corresponding period last year. Revenues from Canadian broadcasting
operations of $207 million were unchanged from the previous year's
third quarter result. EBITDA for Canadian broadcasting operations
was $61 million, 26% lower than for the corresponding period in
2003. The decline in EBITDA was partially due to increased
investment in new programming. As previously announced, the Company
has initiated a process to sell Fireworks' library of Canadian and
international film and television program rights. As a result, all
of Fireworks' operations have now been classified as discontinued.
The Company's financial results for prior periods have been
reclassified on this basis. The Company recorded net earnings from
discontinued operations of $2 million in the third quarter,
compared to a net loss of $14 million for the same operations in
the third quarter last year. For the nine-month period ended May
31, 2004, the Company recorded net earnings from continuing
operations of $135 million or $0.76 per share, compared to net
earnings from continuing operations of $107 million or $0.56 per
share for the nine months ended May 31, 2003. Net earnings in 2003
included a gain of $21 million on the sale of certain Ontario small
market newspapers. For the nine months ended May 31, 2004, the loss
from discontinued operations amounted to $210 million, primarily
related to non-cash charges to adjust the carrying value of the
Fireworks' film and television production and distribution
operations to their estimated fair value. The loss from the same
operation for the same nine-month period in the previous year was
$16 million. Including the results of discontinued operations and
non-cash charges associated with adjustments to the carrying value
of discontinued operations, the Company recorded a net loss of $75
million or $0.43 per share for the nine months ended May 31, 2004
compared to net earnings of $91 million or $0.47 per share for the
same period in 2003. Highlights for the Quarter: Highlights for the
quarter and the period since May 31, 2004 include the following: -
CanWest's New Zealand broadcasting properties were offered to the
public in New Zealand by way of an IPO of ordinary shares of
CanWest MediaWorks (NZ) Limited, a newly incorporated New Zealand
company. The IPO opened June 30, 2004 and will close on July 21,
2004. The IPO is expected to raise NZ$104 million (approximately
$90 million). On completion, CanWest MediaWorks (NZ) Limited will
use the funds raised from the share issue, together with a
concurrent bank financing and further issuance of shares to
CanWest, to acquire all of CanWest's New Zealand television and
radio operations. CanWest is expected to hold 70% of the new
company. Proceeds to CanWest are expected to be NZ$300 million
(approximately $259 million) in cash plus approximately 158.7
million ordinary shares of CanWest MediaWorks (NZ) Limited. Cash
proceeds will be used to reduce bank debt. CanWest will record a
gain of approximately $50 million in its fourth quarter. - On June
30, the Company sold its 29.9% holding of common shares of Ulster
Television Plc. in a transaction effected through the London Stock
Exchange. The cash proceeds from the transaction of approximately
pnds stlg 59 million (approximately $145 million) were used to
reduce bank debt. CanWest will record a gain on the sale of the UTV
shares of approximately $50 million in the fourth quarter. - In
June, the Company successfully refinanced approximately $911
million of its existing senior secured credit facilities. The
refinancing, at current favourable market terms, results in an
annual interest savings of approximately $5 million and extends
maturity of the facilities until August 2009. The refinancing also
included a number of amendments to financial covenants that will
increase the Company's financial flexibility going forward. -
CanWest Television (Global TV Network and CH) has overtaken CTV
(includes Toronto and Kitchener CTV stations) to regain first place
in prime time market share in the key extended Toronto and
Vancouver markets in the Spring 2004 season (January-May), based on
statistics compiled by BBM Canada for adult viewers, 18-34, 18-49
and 25-54 years. This positive momentum is a direct result of
Global's significant investment in new programming and the positive
viewer response to Global's impressive roster of new reality,
sit-com and drama shows, which include The Apprentice, Average Joe,
Two and a Half Men and Las Vegas. - CanWest's newest radio station,
The Beat 91.5 FM launched in Kitchener, Ontario, in February, 2004,
got off to an unprecedented start for a new station, placing second
in audience ratings in a nine radio station market, among its
target audience of young adults (18-34) and fourth among all
listeners. - The Company completed its roll-out of web-based
electronic editions of its newspapers with subscriptions now
available at the National Post and all the Company's large city
newspapers including the Ottawa Citizen, Vancouver Sun, Vancouver
Province, Victoria Times-Colonist, Calgary Herald, Edmonton Journal
the Montreal Gazette, Regina Leader-Post, Saskatoon StarPhoenix and
Windsor Star. Initial interest in electronic editions has been
encouraging, with significant numbers of new subscribers being
readers who did not previously subscribe to the newspapers.
"Looking ahead we expect the strong performance of our
international operations to continue through the balance of 2004.
CanWest Publications continues to perform well, and we expect
improvement in our broadcasting operations in the coming months.
The Company continues to look at modest growth and expansion
opportunities in Canada and elsewhere but, as before, our main
priorities are to accelerate the reduction of corporate debt,
improve operating margins and increase profits," Leonard Asper
added. This news release contains comments or forward-looking
statements that are based largely on the Company's current
expectations and are subject to certain risks, trends and
uncertainties. These factors could cause actual future performance
to vary materially from current expectations. The Company may not
update or revise any forward-looking statements or comments,
whether as a result of new information, future events or otherwise.
The Company's financial statements are available on the corporate
website, http://www.canwestglobal.com/. CanWest Global
Communications Corp. (NYSE: CWG; TSX: CGS.S and CGS.A,
http://www.canwestglobal.com/) is an international media company.
CanWest, Canada's largest publisher of daily newspapers, owns,
operates and/or holds substantial interests in newspapers,
conventional television, out-of-home advertising, specialty cable
channels, radio networks and Web sites in Canada, New Zealand,
Australia, and The Republic of Ireland. CANWEST GLOBAL
COMMUNICATIONS CORP. (1) BUSINESS SEGMENT INFORMATION (unaudited)
(in thousands of Canadian dollars) For the three months ended May
31 ------------------------ 2004 2003 Actual Actual REVENUE
Television Canada 207,483 207,635 Australia - Network TEN 106,857
86,054 New Zealand - 3 and C4 27,180 24,096 Ireland - TV3 9,423
8,556 ----------- ----------- 350,943 326,341 Radio - New Zealand
20,833 17,644 Publications and online - Canada 299,680 300,566
Outdoor - Australia 10,986 9,478 ----------- ----------- TOTAL
COMBINED REVENUE(1) 682,442 654,029 Elimination of equity accounted
affiliates(2) (117,843) (95,532) ----------- ----------- TOTAL
CONSOLIDATED REVENUE 564,599 558,497 ----------- -----------
----------- ----------- OPERATING PROFIT Television Canada 61,322
82,944 Australia - Network TEN 31,412 21,562 New Zealand - 3 and C4
4,748 90 Ireland - TV3 2,993 2,736 ----------- ----------- 100,475
107,332 Radio - New Zealand 5,927 4,421 Publications and online -
Canada 74,269 71,757 Outdoor - Australia 2,116 777 -----------
----------- SEGMENT OPERATING PROFIT 182,787 184,287 Corporate
expenses 6,120 6,728 Restructuring expenses - 14,136 -----------
----------- COMBINED OPERATING PROFIT (EBITDA)(1) 176,667 163,423
Elimination of equity accounted affiliates(2) (33,528) (22,339)
----------- ----------- CONSOLIDATED OPERATING PROFIT (EBITDA)
143,139 141,084 ----------- ----------- ----------- ----------- (1)
Segmented results include the Company's 56.6% economic interest in
Network TEN. (2) Elimination of proportionate interest in
Australia's Network TEN and Outdoor, which are equity accounted in
the consolidated financial statements. CANWEST GLOBAL
COMMUNICATIONS CORP. (1) BUSINESS SEGMENT INFORMATION (unaudited)
(in thousands of Canadian dollars) For the nine months ended May 31
----------------------------------- 2004 2003 2003 Actual Actual
Proforma (2) REVENUE Television Canada 559,712 593,461 593,461
Australia - Network TEN 309,920 245,996 245,996 New Zealand - 3 and
C4 79,860 69,549 69,549 Ireland - TV3 27,042 26,520 26,520
----------- ----------- ----------- 976,534 935,526 935,526 Radio -
New Zealand 65,299 54,654 54,654 Publications and online - Canada
878,167 898,853 858,897 Outdoor - Australia 32,441 27,941 27,941
----------- ----------- ----------- TOTAL COMBINED REVENUE(1)
1,952,441 1,916,974 1,877,018 Elimination of equity accounted
affiliates(3) (342,361) (273,937) (273,937) ----------- -----------
----------- TOTAL CONSOLIDATED REVENUE 1,610,080 1,643,037
1,603,081 ----------- ----------- ----------- -----------
----------- ----------- OPERATING PROFIT Television Canada 147,450
206,833 206,833 Australia - Network TEN 112,274 77,464 77,464 New
Zealand - 3 and C4 17,661 7,063 7,063 Ireland - TV3 8,879 8,651
8,651 ----------- ----------- ----------- 286,264 300,011 300,011
Radio - New Zealand 20,944 15,168 15,168 Publications and online -
Canada 213,995 206,510 196,405 Outdoor - Australia 5,885 2,106
2,106 ----------- ----------- ----------- SEGMENT OPERATING PROFIT
527,088 523,795 513,690 Corporate expenses 20,657 17,197 17,197
Restructuring expenses - 14,136 14,136 ----------- -----------
----------- COMBINED OPERATING PROFIT (EBITDA)(1) 506,431 492,462
482,357 Elimination of equity accounted affiliates(3) (118,159)
(79,570) (79,570) ----------- ----------- ----------- CONSOLIDATED
OPERATING PROFIT (EBITDA) 388,272 412,892 402,787 -----------
----------- ----------- ----------- ----------- ----------- (1)
Segmented results include the Company's 56.6% economic interest in
Network TEN. (2) Proforma results exclude the results of community
newspapers sold February 14, 2003. (3) Elimination of proportionate
interest in Australia's Network TEN and Outdoor, which are equity
accounted in the consolidated financial statements. CANWEST GLOBAL
COMMUNICATIONS CORP. CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED) (In thousands of Canadian dollars except as otherwise
noted) For the three For the nine months ended months ended
---------------------- --------------------- May 31, May 31, May
31, May 31, 2004 2003 2004 2003 Revenue 564,599 558,497 1,610,080
1,643,037 Operating expenses 281,699 277,507 813,787 803,689
Selling, general and administrative expenses 139,761 125,770
408,021 412,320 Restructuring expenses - 14,136 - 14,136
----------- ----------- ----------- ----------- 143,139 141,084
388,272 412,892 Amortization of intangibles 4,375 4,375 13,125
13,125 Amortization of property, plant and equipment 19,364 17,385
56,353 54,771 Other amortization 1,281 1,313 3,670 5,165
----------- ----------- ----------- ----------- Operating income
118,119 118,011 315,124 339,831 Interest expense (77,651) (89,340)
(237,750) (268,502) Interest income 291 - 6,242 - Amortization of
deferred financing costs (1,957) (2,372) (5,862) (7,185) Interest
rate swap gains (losses) 6,843 (4,781) (10,200) (13,634) Foreign
exchange gains (losses) (1,360) (495) 3,766 (559) Investment gains
and losses net of write-down 354 (2,277) (2,460) 19,831 Dividend
income 2,323 1,999 3,738 3,532 ----------- ----------- -----------
----------- 46,962 20,745 72,598 73,314 Provision for income taxes
9,842 8,451 12,790 15,303 ----------- ----------- -----------
----------- Earnings before the following 37,120 12,294 59,808
58,011 Interest in earnings of Network TEN 20,573 12,428 77,165
49,089 Interest in loss of other equity accounted affiliates (207)
(256) (556) (1,035) Realized currency translation adjustments
(5,011) 1,593 (1,885) 693 ----------- ----------- -----------
----------- Net earnings from continuing operations 52,475 26,059
134,532 106,758 Earnings (loss) from discontinued operations 1,862
(13,575) (209,976) (15,958) ----------- ----------- -----------
----------- Net earnings (loss) for the period 54,337 12,484
(75,444) 90,800 ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- Earnings per share
from continuing operations: Basic $0.30 $0.15 $0.76 $0.56 Diluted
$0.30 $0.15 $0.76 $0.56 Earnings (loss) per share: Basic $0.31
$0.07 ($0.43) $0.47 Diluted $0.31 $0.07 ($0.43) $0.47 DATASOURCE:
CanWest Global Communications Corp. CONTACT: Geoffrey Elliot, Vice
President, Corporate Affairs, Ph: (204) 956-2025, Fax: (204)
947-9841, ; John Maguire, Chief Financial Officer, Ph: (204)
956-2025, Fax: (204) 947-9841,
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