- Specialty channels and digital revenues experience double-digit
growth -WINNIPEG, Jan. 14 /CNW/ - Canwest Global Communications Corp. ("Canwest"
or the "Company") today reported financial results for its first quarter 2009
fiscal year that reflect the slower economy and lower advertising volume.
For the three months ended November 30, 2008, the Company reported that
revenues increased 2% to $886 million but that operating profit(1) declined by
9% to $204 million. Results for the first quarter of fiscal 2008 were affected
by the equity accounting of the CW Media specialty television assets that were
held in trust until CRTC approval was received. On a same asset basis,
including the results of the in-trust assets, revenue decreased 7%, operating
expenses, excluding restructuring costs, were down 3% and operating profit
declined by 19%. For the three month period Canwest reported the following:--------------------------------------------
First Quarter
in millions of Fiscal
dollars, except per -----------------------
share amounts 2009 2008 Change
--------------------------------------------
Reported Results
--------------------------------------------
Revenue 886 867 2%
--------------------------------------------
Operating profit (1) 204 223 (9)%
--------------------------------------------
Net earnings (33) 41 (180)%
--------------------------------------------
EPS (0.18) 0.23
--------------------------------------------
Adjusted Net Earnings(*)
--------------------------------------------
Adjusted net earnings 27 61 (56)%
--------------------------------------------
Adjusted EPS 0.15 0.35
--------------------------------------------
(*) Adjusted net earnings exclude the impact of foreign currency and
interest swap gains/losses, foreign exchange gains/losses, investment
gains/losses, restructuring expenses, discontinued operations, and
related income tax effect."Even in these challenging times, Canwest's transformation continues with
double-digit growth in our specialty channels and our online properties. With
every quarter, these businesses continue to demonstrate their growth potential
and illustrate the progress that is being made to increase Canwest's share of
the fastest growing segments of the advertising market," Canwest President and
CEO Leonard Asper said.
"While these results reflect the softening economy and its impact upon
advertising revenues they also demonstrate the Company's success in containing
operating expenses. Recently announced initiatives further demonstrate
Canwest's resolve to take the steps necessary to provide the flexibility
required over the longer-term," Mr. Asper added.
Segmented Results for the First Quarter of Fiscal 2009
Publishing
Revenues for the Company's publishing operations for the first quarter of
$336 million, were 7% lower when compared to the same period in fiscal 2008.
Publishing operating profits of $73 million for the first quarter was down 28%
when compared to the same period in fiscal 2008. The declines in revenues and
operating profits reflect the impact of global economic pressures felt across
all our markets as well as a particularly strong comparative 2008 quarter.
Canadian Television combined (Canadian Television and CW Media)
Canadian television operations, including the CW Media specialty
television operations reported first quarter revenues of $306 million, down $2
million or less than 1% compared to the previous year. Operating expenses,
excluding restructuring costs, decreased by $9 million or 4%. Operating profit
in the first quarter was $76 million, up 10% compared to $69 million the
previous year. These results reflect the strong industry leading performance
of the specialty television operations as well as merger synergies and other
cost containment initiatives.
Australian Television
Network TEN's first quarter revenue of $202 million was down 17% from
$242 million during the same quarter in the previous year. TEN's operating
profit of $74 million was down 28% from the $104 million from the same quarter
in fiscal 2008. TEN's first quarter results were impacted by the decline in
the advertising market driven by softer economic conditions and inclusion of
the AFL Grand Final and the Rugby World Cup which occurred in the
corresponding period in fiscal 2008.Highlights of the first quarter and subsequent period
- Canwest adopted a new operating structure for digital media that will
bring together its publishing and broadcast digital teams under a
single strategy and leadership. This move builds on recent successful
cross platform initiatives and will enable the creation of new
partnerships that will drive traffic to online properties.
- On December 1, 2008, Canwest launched redesigned newspaper websites.
All ten of Canwest's major city daily newspapers simultaneously
launched redesigned online news and information destinations for the
people in their communities. Each site features an interactive
demonstration in the top banner position inviting visitors to tour
the new features of the site. Improved features include: new design
and simplified navigation, increased focus on locally relevant news
and information, wider format, more chances to sound off, richer
media, hyper-local classifieds, and integrated social networking
tools.
- On December 1, 2008, Canwest announced the appointment of Paul
Godfrey to the position of President and CEO, National Post,
effective January 1, 2009. In this role, Mr. Godfrey will build on
the positive momentum of recent strategic initiatives undertaken.
- On December 18, 2008, Canwest announced a partnership with ShopLocal
which will see Canwest as the exclusive supplier of ShopLocal
products and services in Canada. Retailers including Canadian Tire,
Mark's Work Wearhouse, Toys R Us and many others utilize ShopLocal to
drive in-store sales by converting their local print promotions into
engaging and dynamic digital formats. The ShopLocal Canadian site
will bring together content from SmartCirculars (online flyers) as
well as from display ads placed in Canwest newspapers across the
country. All of this content will be searchable by shoppers on
canada.com and Canwest newspaper websites as well as on sites such as
Facebook, Myspace, Lycos, Local.com and more through Canwest's
partnership with Oodle.
- Canwest improved its rankings with five of the Top 10 specialty
analog channels in the Adult 25-54 demographic, up from 4 last year.
This includes two out of the Top 5, up from zero last year.
- Canwest maintained its dominance in the specialty digital channels
with eight of the Top 10 digital channels in the Adult 25-54
demographic.Outlook:
Looking forward, the Company anticipates that advertising revenues will
continue to be negatively impacted by persisting uncertain economic
conditions, with growth in specialty channels and digital sectors while
conventional advertising and publishing will be at levels below last year.
Canwest remains focused on reducing operating expenses, improving
operational efficiencies and protecting the Company's core assets, while
investing in the growth areas of its businesses. The Company will continue to
evaluate and selectively monetize or eliminate non-contributing and non-core
assets. These actions will help to mitigate the effect of the current economic
downturn and better position the Company for the long term.
Continuation of negative conditions may affect the Company's ability to
meet certain financial covenants in its credit facilities. Based upon current
revenue and expense projections, the Company may not be able to comply with
its existing quarterly total financial leverage ratio covenants in fiscal
2009. The Company is reviewing and implementing strategies to ensure
compliance with its covenants, including strategies intended to improve
profitability and reduce debt.
Forward Looking Statements:
This news release contains certain forward-looking statements about the
objectives, strategies, financial conditions, results of operations and
businesses of Canwest. Statements that are not historical facts are
forward-looking and are subject to important risks, uncertainties and
assumptions. These statements are based on our current expectations about our
business and the markets in which we operate, and upon various estimates and
assumptions. The results or events predicted in these forward-looking
statements may differ materially from actual results or events if known or
unknown risks, trends or uncertainties affect our business, or if our
estimates or assumptions turn out to be inaccurate. As a result, there is no
assurance that the circumstances described in any forward-looking statement
will materialize. Significant and reasonably foreseeable factors that could
cause our results to differ materially from our current expectations are
discussed in the section entitled "Risk Factors" contained in our Annual
Information Form for the year ended August 31, 2008 dated November 24, 2008
filed by Canwest Global Communications Corp. with the Canadian securities
commissions (available on SEDAR at www.sedar.com ), as updated in our most
recent Management's Discussion and Analysis for the three months ended
November 30, 2008. We disclaim any intention or obligation to update any
forward-looking statement even if new information becomes available, as a
result of future events or for any other reason.
The Company's financial statements and Management's Discussion and
Analysis for three months ended November 30, 2008 are available on the
Company's website: www.canwest.com. Financial statements and Management's
Discussion and Analysis for three months ended November 30, 2008 for Canwest
Limited Partnership can be found also on www.canwest.com. Financial statements
for Ten Network Holdings Limited can be found at www.tencorporate.com.au.
The Company will hold its regular quarterly conference call with analysts
on January 14, 2009 at 1:00 p.m. Eastern Time. The call-in numbers are
416-644-3415 or 800-732-6179. Replays are also available for ten days
following the call at 416-640-1917 or 877-289-8525 (using the pass-code
21292648 followed by the pound sign.)
About Canwest Global Communications Corp.
Canwest Global Communications Corp. (www.canwest.com), (TSX: CGS and
CGS.A,) an international media company, is Canada's largest media company. In
addition to owning the Global Television Network, Canwest is Canada's largest
publisher of English language daily newspapers and owns, operates and/or holds
substantial interests in conventional television, out-of-home advertising,
specialty cable channels, web sites and radio stations and networks in Canada,
New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and
the United States.CANWEST GLOBAL COMMUNICATIONS CORP.
BUSINESS SEGMENT INFORMATION
(unaudited)
(in thousands of Canadian dollars)
For the three months ended November 30,
------------------------------------------------
Segment operating
-----------------
Revenue profit(1)
------- ---------
Operating Segments 2008 2007 2008 2007
(Revised) (Revised)
Publishing 335,998 361,906 73,077 102,165
---------- ---------- ---------- ----------
Television
Canada 199,915 210,792 31,722 32,250
CW Media 106,099 97,127 44,283 37,132
---------- ---------- ---------- ----------
306,014 307,919 76,005 69,382
Australia 202,181 242,336 74,384 103,505
---------- ---------- ---------- ----------
508,195 550,255 150,389 172,887
Radio - Turkey 3,346 3,564 1,291 1,584
Out-of-home 39,197 42,287 1,295 3,142
Intersegment revenues (629) (1,538) - -
Corporate and other - - (7,204) (9,512)
Restructuring expenses - - (14,775) (11,645)
---------- ---------- ---------- ----------
886,107 956,474 204,073 258,621
Elimination of equity
accounted affiliates - (89,123) - (35,415)
---------- ---------- ---------- ----------
886,107 867,351 204,073 223,206
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
(1) Operating profit is defined as earnings before interest, income
taxes, amortization of intangibles, amortization of property and
equipment, other amortization, interest rate and foreign currency
swap gains (losses), accretion of long term liabilities, interest
income, foreign exchange gains (losses), investment gains, losses and
write-downs, minority interest, interest in earnings of equity
accounted affiliates, realized currency translation adjustments and
loss from discontinued operations. This supplementary earnings
measure does not have a standardized meaning prescribed by Canadian
generally accepted accounting principles and may not be comparable to
similar measures presented by other companies nor should it be viewed
as an alternative to net earnings. When used in relation to our
operating segments it is a GAAP measure in that is our segment
profitability measure. The reconciliation of operating profit to net
earnings is evident on the face of the following consolidated
statements of earnings.
CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(UNAUDITED)
(In thousands of Canadian dollars except as otherwise noted)
For the three months ended
----------------------------
November 30, November 30,
2008 2007
Revenue 886,107 867,351
Operating expenses 448,879 417,416
Selling, general and administrative expenses 218,380 215,084
Restructuring expenses 14,775 11,645
------------- -------------
204,073 223,206
Amortization of intangibles 2,177 2,431
Amortization of property and equipment 26,488 24,898
Other amortization 148 222
------------- -------------
Operating income 175,260 195,655
Interest expense (80,417) (82,435)
Accretion of long term liabilities (28,233) (23,881)
Interest income 765 16,369
Interest rate and foreign currency swap
gains (losses) 26,483 (27,759)
Foreign exchange gains (losses) (67,501) 6,087
Investment gains, losses and write-downs (1,163) 2,868
------------- -------------
25,194 86,904
Provision for income taxes 39,195 35,923
------------- -------------
Earnings (loss) before the following (14,001) 50,981
Minority interest (18,776) (28,679)
Interest in earnings of equity accounted
affiliates 215 19,836
------------- -------------
Net earnings (loss) from continuing
operations (32,562) 42,138
Loss from discontinued operations - (1,393)
------------- -------------
Net earnings (loss) for the period (32,562) 40,745
------------- -------------
------------- -------------
Earnings (loss) per share from continuing
operations:
Basic ($0.18) $0.24
Diluted ($0.18) $0.24
Earnings (loss) per share:
Basic ($0.18) $0.23
Diluted ($0.18) $0.23
For further information: Media Contact: John Douglas, Vice President,
Public Affairs, Tel: (204) 953-7737, jdouglas@canwest.com; Investor Contact:
Hugh Harley, Director, Investor Relations, Tel: (204) 953-7731,
hharley@canwest.com
