- Publishing business and specialty channels continue to
lead country in growth -
- Non-cash impairment loss recorded on Conventional Television -WINNIPEG, Nov. 14 /CNW/ - Canwest Global Communications Corp. ("Canwest"
or the "Company") today reported financial results for its fourth quarter and
its fiscal year ended August 31, 2008. For the year, Canwest reported a net
loss of $1,040 million including a non-cash $1,010 million write-down of
goodwill and broadcast licences related to its Canadian conventional
television operations.
The write-down reflects a deterioration in the near term profit
expectations for the Company's Canadian conventional television business
resulting from expected softness in conventional television advertising
revenues combined with structural and regulatory challenges specifically
facing the Canadian conventional television industry. Net earnings were $279
million for the previous year.
Operating profit(1) in fiscal 2008 increased by 13% to $558 million from
$492 million for fiscal 2007. Consolidated revenues for the year of $3,146
million increased 10% from $2,864 million in fiscal 2007.-----------------------------------------------------------------------
in millions of Three months Twelve months
dollars, except per ended August 31 ended August 31
------------------------------------------------
share amounts 2008 2007 2008 2007 Change
-----------------------------------------------------------------------
Reported Results
-----------------------------------------------------------------------
Revenue 726 678 3,146 2,864 10%
-----------------------------------------------------------------------
Operating profit(1) 61 79 558 492 13%
-----------------------------------------------------------------------
Net earnings (1,019) 197 (1,040) 279 (473)%
-----------------------------------------------------------------------
EPS (5.73) 1.11 (5.85) 1.57
-----------------------------------------------------------------------
Adjusted Net Earnings(*)
-----------------------------------------------------------------------
Adjusted net
earnings (38) (65) 21 (6) 450%
-----------------------------------------------------------------------
Adjusted EPS (0.21) (0.37) 0.12 (0.03)
-----------------------------------------------------------------------
(*) Adjusted net earnings exclude the impact of foreign currency and
interest swap gains/losses, foreign exchange gains/losses, investment
gains, losses and write downs, restructuring expenses, discontinued
operations, impairment losses and related income tax effect.Canwest President and CEO Leonard Asper said the Company's actions in
writing down its conventional television goodwill and broadcast licences were
consistent with those of many other major media organizations throughout North
America, responding to the negative impact of the current market. This,
combined with the pressure on Canadian conventional television of an
unbalanced regulatory framework, increased programming costs, required
investment in technology and increased competition from specialty television
as well as non-traditional media led to the write-down. The write down is a
non-cash charge to income that does not affect Canwest's liquidity, cash flows
from operating activities, debt covenants, or have any impact on future
operations.
Mr. Asper said Canwest has been preparing throughout much of fiscal 2008
for tougher economic times adding the Company will do what is necessary to
improve our financial performance in the near term. "We have seen impairment
charges such as these in other large media companies throughout North
America," Mr. Asper said. "The sooner we recognize the new reality, the faster
we can recalibrate our business and move it forward."
He added: "We believe investors should focus on the more important
fundamentals of our business. Our publishing operations and specialty channels
continue to produce strong operating profit and cash flows and continue to
out-perform the industry. Our digital media continues to produce strong growth
overall and we continue to transform our business by exacting better, more
efficient, performance from our core assets while investing in growth media in
response to the evolving habits and expectations of consumers, advertisers and
distributors.
"Throughout 2008 we have invested in products and programs that have the
potential to have a meaningful impact on our future and we have made
significant progress in aligning our expenses with the economic times in which
we operate. Earlier this week, we took steps to address the negative impact of
current market conditions while continuing to provide the quality products and
services that our customers expect."Segmented Results
PublishingRevenues for the Company's publishing operations for the fourth quarter
of $300 million, were $5 million below the revenues for the same period in
fiscal 2007. Publishing operating profits of $54 million for the fourth
quarter were down 5% from $57 million for the same period in fiscal 2007. For
the twelve months ended August 31, 2008, revenues were $1,302 million and
operating profit was $294 million, up 1% and 9% respectively, from the same
periods last year. The growth in operating profit for the fiscal year reflects
the focus on cost containment within the publishing operations.
Canadian Television combined (Canadian Television and CW Media)
Canadian television operations, including CW Media (formerly Alliance
Atlantis broadcast segment) specialty television operations reported fourth
quarter revenues of $207 million, an increase of 63% from $127 million for the
previous year. Operating profit in the fourth quarter was negative $0.2
million compared to negative $10 million the previous year. For the twelve
months ended August 31, 2008, reported revenues were $1,031 million and
operating profit was $165 million, up 51% and 170% respectively, from similar
periods last year. The strong year over year increases primarily reflect the
acquisition of the CW Media specialty television operations.
Canadian television operations, including revenue and adjusted operating
profit of the specialty operations of Alliance Atlantis on a pro forma basis
for the three months ended August 31, 2007, revenue and operating profit would
have increased $4 million from $204 million and decreased $2 million from $2
million. For the twelve months ended August 31, 2008, revenue and operating
profit increased 2% to $1,031 million and 14% to $165 million, respectively,
over the prior year on a pro forma basis.
Canadian Television (Canwest Legacy)
Canadian television operations, excluding the CW Media specialty
television operations reported fourth quarter revenues of $127 million, flat
compared to revenues for the same period in fiscal 2007. Operating profit of
negative $19 million was down from negative $10 million for the corresponding
period last year. For the twelve months ended August 31, 2008, revenues were
$671 million and operating profit was $44 million, down 2% and 28%,
respectively, from the same period last year. The lower revenue and operating
profit performance for the fourth quarter and twelve month periods primarily
relate to the impact of the writers' strike which disrupted program schedules
and viewing patterns, the loss of the NFL, and in the fourth quarter the
effects of the Olympics and continued economic softness. These declines were
partly offset by strong growth in specialty television assets.
CW Media (Alliance Atlantis specialty channels)
The CW Media specialty television assets reported revenues of $81 million
and operating profit of $19 million for the fourth quarter, an increase of 5%
on revenue and 57% on operating profit compared to the same period last year,
on a pro forma basis. For the twelve months ended August 31, 2008, revenues
were $360 million and operating profit was $121 million up 11% and 44%
respectively, compared to the same period last year on a pro forma basis.
Advertising revenues were up significantly for the twelve month period,
reflecting an industry leading growth rate of 16%.
Australian Television
Network TEN's fourth quarter revenue of $177 million was down 14% from
$205 million during the same quarter in the previous year. TEN's operating
profit of $12 million was down 77% from the $52 million from the same quarter
in fiscal 2007. For the twelve months ended August 31, 2008, reported revenues
were $753 million and operating profit was $185 million, up 2% and down 10%,
respectively, from similar periods last year. TEN's fourth quarter results
were impacted by the sudden decline in the advertising market driven by softer
economic conditions and the impact of the Beijing Olympic Games.Highlights of the fourth quarter and subsequent period
- On November 12, 2008, Canwest announced restructuring plans in
response to the economic downturn and softer advertising and
structural challenges within Canadian conventional television. The
plan includes the elimination of approximately 560 positions. The
restructuring plans are expected to reduce operating costs in fiscal
2009 by approximately $47 million. This represents annualized savings
of approximately $61 million.
- Canwest sold its FM Radio Stations in United Kingdom. The sale of
these assets will improve the Company's operating profit by about $7
million annually.
- Xtreme Sports, an underperforming specialty channel was discontinued
- The Lonestar specialty channel was rebranded to MovieTime in order to
improve profitability
- Canwest Publishing's focus and commitment to growing its Digital
Media Division continued with the appointments of a Vice President of
Strategy and Product Development, a Vice President and General
Manager of Mobile and a Director of Local Digital Products.
- Canwest Broadcasting announced the country's most extensive line-up
of programs available for streaming on its network websites.
Canadians will have access to over 50 hit programs online. Hit shows
include No.1 program House, Heroes, The Office, and Deal or No Deal
and daytime hits The Young and the Restless and Days of our Lives.
- Canwest Broadcasting announced a Video On Demand deal with Rogers,
through which for the first time in Canada, television viewers will
have access to the biggest slate of their favourite first-run Global
and E! network shows. More than 60 hours of Global and E! will be
available. Viewers will have access to shows that include House,
Heroes, The Office, 24, The Guard, Bones, Prison Break, and E! True
Hollywood Story. Also of note, daytime hits The Young and the
Restless and Days of our Lives will also be made available.
- History was Canwest's top specialty channel this summer for Adults
25-54 with audiences 12% ahead of last year, and is in the Top 5
Analog services.
- This summer Food Network and TVtropolis specialty analog channels
moved up into the top 10 rankings and improved audiences for Adults
25-54 compared to last year.
- Canwest maintained its dominance in the specialty digital channels
with eight of the top 10 channels consistent with last year for
Adults 25-54.
- Canwest fall season has shown solid success with top hits House,
Heroes, Survivor, and Prison Break, returning with strong ratings.
- Network TEN in Australia announced a new sports digital multi-channel
to launch in the second quarter of calendar 2009. It is the first
all-new commercial free-to-air television channel in almost 50 years.
The new channel, named ONE, will broadcast in High Definition and it
will also be available in Standard Definition to the approximate 45%
of Australian households who have digital terrestrial television
sets.
Outlook:In these uncertain economic conditions we remain focused on continuing to
transform our business by utilizing technology and redesigning our workflows
to improve the efficiency of our operations. In addition, we continue to
evaluate and selectively eliminate or monetize non-productive or non-core
assets. While we anticipate that advertising revenues will be negatively
affected by the current economic slowdown we expect that these measures will
mitigate the effect of this downturn and at the same time better position the
Company for the long term. The Company will also continue to focus its
attention on growth media that respond to the evolving habits and expectations
of consumers, advertisers and distributors and that have the potential to have
a meaningful impact on our future.
Given the uncertainty as to the economic outlook the Company has
renegotiated certain provisions of its senior credit facility, including an
increase to the total leverage ratio covenant. With increased financial
flexibility and the operational/restructuring initiatives announced on
November 12, 2008, the Company believes it will have sufficient liquidity to
execute its business plans.
Canwest remains dedicated to taking the necessary steps to provide the
Company with the flexibility required over the longer-term, including further
operational improvements and the sale of non-core assets.
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, 2007 dated November 20, 2007
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 and twelve months
ended August 31, 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 and twelve months ended August 31, 2008 are available on
the Company's website: www.canwest.com. Financial statements and Management's
Discussion and Analysis for three and twelve months ended August 31, 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 November 14, 2008 at 10:00 a.m. Eastern Standard Time. The call-in numbers
are 416-644-3424 or 800-594-3615. Replays are also available for ten days
following the call at 416-640-1917 or 877-289-8525 (using the pass-code
21287213 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 For the twelve months
-------------------- ---------------------
ended ended
----- -----
August 31, August 31,
---------- ----------
2008 2007 2008 2007
(Revised) (Revised)
REVENUE
Publishing 299,934 305,258 1,302,456 1,285,298
--------- --------- ---------- ----------
Television
Canada 126,756 127,028 670,702 683,035
CW Media 80,585 - 360,024 -
--------- --------- ---------- ----------
207,341 127,028 1,030,726 683,035
Australia 177,408 205,366 752,530 738,475
--------- --------- ---------- ---------
Total Television 384,749 332,394 1,783,256 1,421,510
--------- --------- ---------- ----------
Radio - Turkey 4,128 3,927 15,012 14,920
Out-of-home 39,534 37,178 161,641 146,226
Intersegment revenues (2,421) (393) (7,613) (3,796)
--------- --------- ---------- ----------
725,924 678,364 3,254,752 2,864,158
Elimination of equity
accounted affiliates - - (108,767) -
--------- --------- ---------- ----------
CONSOLIDATED REVENUE 725,924 678,364 3,145,985 2,864,158
--------- --------- ---------- ----------
--------- --------- ---------- ----------
SEGMENT OPERATING PROFIT
Publishing 54,247 57,324 294,415 269,096
--------- --------- ---------- ----------
Television
Canada (19,326) (10,163) 44,375 61,266
CW Media 19,080 - 120,571 -
--------- --------- ---------- ----------
(246) (10,163) 164,946 61,266
Australia 12,121 52,493 185,474 205,251
--------- --------- ---------- ----------
Total Television 11,875 42,330 350,420 266,517
--------- --------- ---------- ----------
Radio - Turkey 1,352 1,974 5,831 5,832
Out-of-home 397 (839) 6,369 416
Corporate and other (6,203) (8,346) (34,223) (32,958)
Corporate development
expenses - (13,462) - (16,910)
Restructuring expenses (441) - (20,715) -
--------- --------- ---------- ----------
61,227 78,981 602,097 491,993
Elimination of equity
accounted affiliates - - (44,440) -
--------- --------- ---------- ----------
OPERATING PROFIT(1) 61,227 78,981 557,657 491,993
--------- --------- ---------- ----------
--------- --------- ---------- ----------
(1) Operating profit is defined as earnings before interest, income
taxes, amortization of intangibles, property and equipment, other
amortization, interest rate and foreign currency swap gains (losses),
accretion of long term liabilities, interest income, amortization of
deferred financing costs, foreign exchange gains (losses), impairment
loss on goodwill, impairment loss on intangible assets, investment
gains, losses and write-downs, minority interest, interest in
earnings of equity accounted affiliates, realized currency
translation adjustments and earnings 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 For the twelve months
-------------------- ---------------------
ended ended
----- -----
August 31, August 31,
---------- ----------
2008 2007 2008 2007
Revenue 725,924 678,364 3,145,985 2,864,158
Operating expenses 468,117 391,019 1,714,599 1,560,475
Selling, general
and administrative
expenses 196,139 208,364 853,014 811,690
Restructuring expenses 441 - 20,715 -
----------- --------- ---------- ----------
61,227 78,981 557,657 491,993
Amortization of
intangibles 2,201 2,361 9,040 6,395
Amortization of property
and equipment 31,363 24,067 113,994 93,330
Other amortization 53 225 596 1,403
----------- --------- ---------- ----------
Operating income 27,610 52,328 434,027 390,865
Interest expense (89,591) (59,178) (328,517) (190,227)
Accretion of long
term liabilities 6,792 (3,603) (67,560) (3,603)
Interest income 1,246 2,770 22,162 5,946
Amortization of
deferred financing
costs - (7,413) - (12,794)
Interest rate and
foreign currency
swap gains (losses) 6,781 16,886 (53,991) 15,955
Foreign exchange
gains (losses) (15,454) 5,121 (10,219) 9,690
Investment gains,
losses and write-downs (9,450) (1,207) (31,652) 8,448
Impairment loss
on intangible assets (408,484) - (408,484) -
Impairment loss
on goodwill (601,318) - (601,318) -
----------- --------- ------------ ----------
(1,081,868) 5,704 (1,045,552) 224,280
Provision for
(recovery of)
income taxes (64,360) 25,469 (21,449) 94,013
----------- --------- ------------ ---------
Earnings (loss)
before the following (1,017,508) (19,765) (1,024,103) 130,267
Minority interest 5,649 (26,390) (42,439) (105,490)
Interest in earnings
of equity accounted
affiliates 283 986 39,989 2,422
Realized currency
translation
adjustments 1,912 (5,916) 850 (5,351)
----------- --------- ------------ ---------
Net earnings (loss)
from continuing
operations (1,009,664) (51,085) (1,025,703) 21,848
Gain (loss) on sale
of discontinued
operations (6,970) 251,998 (6,970) 251,998
Earnings (loss)
from discontinued
operations (1,931) (3,457) (7,407) 5,481
----------- --------- ---------- ---------
Net earnings (loss)
from discontinued
operations (8,901) 248,541 (14,377) 257,479
----------- --------- ---------- ---------
Net earnings (loss)
for the period (1,018,565) 197,456 (1,040,080) 279,327
----------- --------- ------------ ---------
----------- --------- ------------ ---------
Earnings (loss)
per share from
continuing
operations:
Basic ($5.68) ($0.29) ($5.77) $0.12
Diluted ($5.68) ($0.29) ($5.77) $0.12
Earnings (loss)
per share:
Basic ($5.73) $1.11 ($5.85) $1.57
Diluted ($5.73) $1.11 ($5.85) $1.57
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
