Score Media achieves record revenue and earnings in Q3 2008



    TORONTO, July 10 /CNW/ - Score Media Inc. (TSX: SCR) announces its
financial results for the three and nine months ended May 31, 2008:

    HIGHLIGHTS

    
    -   Revenue for the three months ended May 31, 2008 was $10.2 million,
        compared to $9.4 million in the prior year, an increase of
        $0.8 million. The Company exceeded $10 million in quarterly revenue
        for the first time in its history.

    -   EBITDA for the three months ended May 31, 2008 was $2.2 million
        compared to $1.9 million in the same period last year, an increase of
        $0.3 million.

    -   In March 2008 the Company launched its second year of cross-platform
        coverage of NCAA March Madness, featuring extensive coverage of the
        tournament on television, online, on mobile devices and on video-on-
        demand. In The Score's key 18-49 year old male demographic,
        television audiences were up 14% over tournament coverage in the
        prior year. On the web, unique visitors were up 27% versus the same
        period in 2007. Web coverage of the tournament included an online
        portal featuring exclusive video content, fantasy analysis, and
        real-time game blogs.

    -   In the Company's third quarter, the The Score provided significant
        coverage of the NBA basketball playoffs. Audiences for the NBA
        Playoffs were up 40% versus the prior year, including an increase of
        38% in the key 18-49 year old male demographic.

    -   The Score broadcast the Canadian Interuniversity Sports basketball
        championship in high definition and achieved a record audience with a
        tournament average of 77,000 viewers, up 157% from 2007.

    -   This year fans could follow NCAA March Madness on the Apple iPhone
        and iPod touch via ScoreMobile iPhone Edition. In its first year of
        availability, the web-based application, which provides previews, box
        scores, and recaps, delivered more than 500,000 page views during the
        tournament and over 25,000 unique US and Canadian visitors. The
        tournament could also be followed on Canadian wireless carriers via
        ScoreMobile 2.0 and with video highlights and features available on
        ScoreMobile Video.
    

    The Company achieved significant revenue and earnings growth over the
three months ended May 31, 2008, posting record top-line and EBITDA figures
for a quarterly period. Increased revenue was achieved across all of the
Company's platforms in the third quarter of fiscal 2008, and can be attributed
to the continued emergence of Score Media's interactive properties and
Hardcore Sports Radio, as well as growth in its television operations.
    "Q3 was an excellent quarter for Score Media," said John Levy, Chairman
and Chief Executive Officer. "We achieved record quarterly revenue and EBITDA,
and posted solid audience growth in our core live event properties, both on
television and online."
    "In addition, our cross platform coverage of the NCAA March Madness
tournament and the NBA playoffs was very well received by our advertising
partners," continued Levy. "Advertisers are increasingly demanding creative
integrated solutions and Score Media is well positioned to capitalize on
this."

    ABOUT SCORE MEDIA INC.

    Score Media is a media company committed to creating consumer value
through creative solutions, technology, and innovation in response to sports
fans' growing desire for increased participation in their consumption of
sports content. The Company's main asset is The Score Television Network ("The
Score"), a national specialty television service providing sports, news,
information, highlights and live event programming, available across Canada in
more than 6.3 million homes. Score Media also operates Hardcore Sports Radio,
a satellite radio network available across North America on Sirius Satellite
Radio, and other interactive assets including theScore.com, Score Mobile, and
Score Poker.

    Forward-looking (safe harbour) statement

    Statements made in this news release that relate to future plans, events
or performances are forward-looking statements. Any statement containing words
such as "believes", "plans", "expects" or "intends" and other statements which
are not historical facts contained in this release are forward-looking, and
these statements involve risks and uncertainties and are based on current
expectations. Consequently, actual results could differ materially from the
expectations expressed in these forward-looking statements.

    
    The following tables reconcile net income to EBITDA:

    -------------------------------------------------------------------------
                                                Three months    Three months
                                                       ended           ended
                                                      May 31,         May 31,
                                                        2008            2007
    -------------------------------------------------------------------------
                                                      (000's)         (000's)

    Net income for the period                        $   684         $   723
    Add back:
      Restructuring charges                               37               -
      Depreciation and amortization                      818             483
      Interest expense (net)                              15              35
      Income tax expense                                 631             683
    -------------------------------------------------------------------------
    EBITDA                                           $ 2,185         $ 1,924
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                 Nine months     Nine months
                                                       ended           ended
                                                      May 31,         May 31,
                                                        2008            2007
    -------------------------------------------------------------------------
                                                      (000's)         (000's)

    Net income for the period                        $   866         $ 1,856
    Less:
      Gain on sale of investments:                       462              21
    Add back:
      Restructuring charges                              966               -
      Depreciation and amortization                    2,057           1,269
      Interest expense (net)                              24             114
      Income tax expense                                 880           1,881
    -------------------------------------------------------------------------
    EBITDA                                           $ 4,331         $ 5,099
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Results

    The following selected quarterly financial data of the Corporation relates
to the eight quarters ended May 31, 2008.
    -------------------------------------------------------------------------
                                                                  Income per
                                                                     share -
                                                                   basis and
    Quarterly Results      Revenue        EBITDA     Net income      diluted
    -------------------------------------------------------------------------
                           ($000's)      ($000's)      ($000's)          ($)
    -------------------------------------------------------------------------
    May 31, 2008            10,206         2,185           684          0.01
    -------------------------------------------------------------------------
    February 29, 2008        8,363           939            34          0.00
    -------------------------------------------------------------------------
    November 30, 2007        9,290         1,207           148          0.00
    -------------------------------------------------------------------------
    August 31, 2007          7,218           788           931          0.01
    -------------------------------------------------------------------------
    May 31, 2007             9,364         1,924           723          0.01
    -------------------------------------------------------------------------
    February 28, 2007        7,731         1,159           262          0.00
    -------------------------------------------------------------------------
    November 30, 2006        9,221         2,017           871          0.01
    -------------------------------------------------------------------------
    August 31, 2006          6,935         1,015         9,805          0.11
    -------------------------------------------------------------------------
    

    The Company's revenues have historically reflected a seasonality trend,
with the third quarter (ending May 31st) being the strongest, followed by the
first quarter (ending November 30th), the fourth quarter (ending August 31st),
and finally the second quarter (ending February 28th). This seasonality
reflects general trends for sports media advertising, which in turn reflects
the schedules (particularly the playoffs) of the major sports leagues.

    Three Months Ended May 31, 2008

    Revenue for the three months ended May 31, 2008 increased by $0.8 million
to $10.2 million compared to $9.4 million in the prior year. This revenue
increase was due to a combination of greater television subscriber revenue,
increases in television advertising and barter revenues, and increased
revenues from Hardcore Sports Radio and Score Media's interactive properties
that were launched during the past 2 years.
    Television subscriber revenue increased approximately $0.1 million in the
third quarter reflecting continued growth in the subscriber base with several
broadcast distribution undertakings. Television advertising revenue increased
by approximately $0.2 million in the third quarter of fiscal 2008 compared to
the prior year, reflecting successes in broadcasting several live event sports
programs in the third quarter of fiscal 2008. The emerging business units and
television barter transactions provided increased revenue of approximately
$0.5 million compared to the third quarter of fiscal 2007.
    Production and other direct expenses were $3.7 million for the three
months ended May 31, 2008 compared to $3.5 million in the prior year, an
increase of $0.2 million. This increase in operating expenses resulted from
higher programming expenses associated with the Company's emerging business
units and more live event programming expenses (particularly high definition
production costs) amounting to $0.2 million.
    Selling, general and administrative expenses were $3.0 million for the
three months ended May 31, 2008 compared to $2.6 million in the prior year, an
increase of $0.4 million. This increase resulted primarily from increased
barter marketing costs.
    Program rights expenses were $1.3 million during the third quarter of
2008 and 2007. The Score continues to provide coverage of EPL soccer, NBA
basketball, and NCAA basketball and football.
    EBITDA for the three months ended May 31, 2008 was $2.2 million compared
to $1.9 million in the same period last year, an increase of $0.3 million.
During the three months ended May 31, 2008 several streams of revenue
increased compared with the same period in the prior year, with more moderate
and anticipated increases in operating costs associated with high definition
television programming, marketing efforts, and increased investment in the
Company's emerging business units.
    Depreciation and amortization expense increased $0.3 million in the third
quarter to $0.8 million compared to $0.5 million in the prior year, reflecting
the depreciation of new fixed assets in The Score as well as in Hardcore
Sports Radio and Score Media's interactive properties that were launched in
the past 2 years. For the third quarter, fixed asset additions were
$6.2 million compared to $1.2 million in the prior year, reflecting the
Company's investment in high definition broadcasting infra-structure and in
new software and computer equipment to support the emerging interactive
properties.
    Net income for the three months ended May 31, 2008 was $0.7 million or
$0.01 per share based on a diluted weighted average 99.4 million Class A
Subordinate Voting Shares and Special Voting Shares outstanding, consistent
with the same period in the prior year based on a diluted weighted average
99.6 million Class A Subordinate Voting Shares and Special Voting Shares
outstanding.
    During the three months ended May 31, 2008 net income was net of future
income tax expenses in the amount of $0.6 million compared to $0.7 million in
the same period last year, a decrease of $0.1 million. The Company's statutory
tax rate in fiscal 2008 is 34.4% (2007 - 36.1%).

    Nine Months Ended May 31, 2008

    Revenue for the nine months ended May 31, 2008 increased by $1.6 million
to $27.9 million compared to $26.3 million in the prior year. This increase
was due to increased television subscriber revenue and increased revenues from
Hardcore Sports Radio, television barter transactions, and Score Media's
interactive properties that were launched in the past 2 years.
    Television subscriber revenue increased approximately $0.4 million in the
first nine months of fiscal 2008 reflecting continued growth in the subscriber
base with several broadcast distribution undertakings. The emerging business
units provided increased revenue of approximately $0.8 million compared to the
first nine months of fiscal 2007. In addition, the Company recorded an
additional $0.4 million in revenue related to television barter transactions
in the first nine months of fiscal 2008 compared to the prior year.
    Production and other direct expenses were $11.7 million for the nine
months ended May 31, 2008 compared to $10.6 million in the prior year, an
increase of $1.1 million. This increase in operating expenses resulted from
higher programming expenses associated with the Company's emerging business
initiatives and more live event programming expenses (particularly high
definition production costs) amounting to $0.9 million, and increased sports
data and other technical expenses amounting to $0.2 million.
    Selling, general and administrative expenses were $8.0 million for the
nine months ended May 31, 2008 compared to $7.3 million in the prior year, an
increase of $0.7 million. This increase resulted from increased barter
marketing expenses.
    Program rights expenses were $3.8 million during the nine month period
ended May 31, 2008, compared to $3.3 million in the prior year, an increase of
$0.5 million. Program rights for the nine month period ended May 31, 2008
increased for live events such as EPL soccer, and NBA and NCAA basketball
compared to the same period in fiscal 2007.
    EBITDA for the nine months ended May 31, 2008 was $4.3 million, compared
to $5.1 million during the same period last year, a decrease of $0.8 million.
During the nine months ended May 31, 2008 operating costs increased as
anticipated reflecting increased spending for high definition television
programming, marketing efforts, and increased investment in the Company's
emerging business units.
    Restructuring charges for the nine months ended May 31, 2008 amounted to
$1.0 million compared to nil for the same period in the prior year. During
2008 the Company incurred severance and related compensation charges as the
Company transformed the structure of certain operational departments to be
more in-line with the Company's growth strategy. To date, $0.9 million has
been paid in respect to these provisions, and as at May 31, 2008, $0.1 million
remains unpaid and is recorded in accrued liabilities. The Company anticipates
that the balance of the restructuring accrual will be substantially paid in
fiscal 2008.
    Gain on sale of investments for the nine months ended May 31, 2008
amounted to $0.5 million compared to nil for the same period in the prior
year. In the second quarter of fiscal 2008 the Company sold a minority
investment that was purchased in 2000 for proceeds of $0.5 million; the
investment was recorded at a nominal amount on the date disposed.
    Depreciation and amortization expense for the nine month period ended
May 31, 2008 increased $0.8 million to $2.1 million, compared to $1.3 million
in the prior year, reflecting the depreciation of new fixed assets in The
Score as well as Hardcore Sports Radio and Score Media's interactive
properties that were launched in the past 2 years. Fixed asset additions of
$10.5 million were largely associated with the Company's investment in high
definition broadcasting infra-structure and in new software and computer
equipment to support the emerging interactive properties.
    Net income for the nine months ended May 31, 2008 was $0.9 million or
$0.01 per share based on a diluted weighted average 99.3 million Class A
Subordinate Voting Shares and Special Voting Shares outstanding, compared to
$1.9 million or $0.02 per share based on a diluted weighted average 98.4
million Class A Subordinate Voting Shares and Special Voting Shares
outstanding in the prior year. Net income declined in the comparative periods
primarily due to a restructuring charge in the amount of $1.0 million recorded
in the first 9 months of fiscal 2008, in addition to increases in operating
costs which were offset by increased revenues and a reduction in future income
taxes.
    During the nine months ended May 31, 2008, net income was net of future
income tax expense of $0.9 million compared to $1.9 million in the same period
last year, a decrease of $1.0 million. The decrease in future income tax
expense was the result of (i) reduced income taxes in the amount of
$0.6 million as a result of a decrease in pre-tax net income in comparison to
the first nine months of 2007; (ii) an increase in future tax assets in the
amount of $0.4 million based on additional temporary differences arising in
the first nine months of fiscal 2008 due to the significant capital
expenditure program in the current year; and (iii) a release of valuation
allowance in the amount of $0.3 million. These factors were mitigated by
additional future income tax expenses recorded based on a modification in
corporate income tax rates. In December 2007, a federal corporate tax rate
reduction was implemented by the government. The impact of this rate change
was a reduction of the Company's tax asset in the amount of $0.3 million.
    The Company's statutory tax rate in fiscal 2008 has been reduced to 34.4%
(2007 - 36.1%).

    Liquidity and Capital Resources

    Cash flows provided by operations for the three months ended May 31, 2008
were $2.2 million compared to $1.4 million in the prior year. The increase of
$0.8 million reflects movements in non-cash working capital and increased
depreciation related to the Company's HD studio build.
    For the nine months ended May 31, 2008, cash flows provided by operations
were $4.6 million compared to $3.2 million in the prior year. The increase of
$1.4 million reflects movements in non-cash working capital and increased
depreciation and gain on sale of investments, which was partially offset by a
reduction in net income and reduced future income taxes.
    For the balance of fiscal 2008, the Company anticipates that cash flows
provided by operations will increase compared to fiscal 2007 based on
anticipated increases in both television advertising and subscriber revenues,
coupled with additional revenues from the Company's interactive properties and
Hardcore Sports Radio, with more moderate increases in operating expenses.
    Cash flows provided by financing activities for the three months ended
May 31, 2008 was $2.2 million compared to $0.4 million in the prior year. The
Company increased its borrowing under the revolving credit facility in the
third quarter of 2008 by $2.2 million. Additional funds were drawn from the
facility to finance the fiscal 2009 capital expenditure plan. Cash flow used
in financing activities for the nine months ended May 31, 2008 was
$5.3 million compared to cash flow provided by financing activities of 0.4
million during the prior year. The Company made significant repayments on the
Company's credit facility in the amount of $5.5 million during the current
year. As a result of these repayments, the Company reduced its interest
charges.
    On August 28, 2007, the Company entered into a $25 million revolving
three-year term credit facility with a Canadian chartered bank. The revolving
credit facility is available to fund capital improvements and for general
corporate purposes. The credit facility allows the Company to borrow by way of
prime rate loans, bankers' acceptances ("BAs") or letters of guarantee. Loans
and BAs bear interest at rates that are dependent on financial ratios. The
provisions of the Company's bank credit facility impose restrictions, the most
significant of which are restrictions on investments, sales of assets, and the
maintenance of certain financial covenants. Financial covenants include total
funded debt to EBITDA and maximum capital expenditure amounts.
    Loans under the credit facility are secured by a pledge of substantially
all the assets of the Company, including a pledge of all the issued and
outstanding shares of each of its operating subsidiaries and the subordination
and pledge of inter-company loans.
    As of May 31, 2008 the Company had drawn $3.7 million from the credit
facility. The Company believes that its cash and cash equivalents, in addition
to the bank credit facility, provide it with sufficient working capital to
support its operations for the foreseeable future.
    Cash flows used in investing activities for the three months ended
May 31, 2008 was $6.2 million compared to $1.3 million in the prior year, an
increase of $4.9 million. Fixed asset expenditures during the third quarter of
fiscal 2008 totaled $4.3 million for technical production equipment -
primarily for high definition television broadcasting, $0.1 million for
computer software and video - primarily relating to the Company's development
of theScore.com, and $1.8 million for leasehold improvements. Leasehold
improvement costs in the current period relate to the design and construction
of the Company's streetfront exterior.
    Cash flows used in investment activities for the nine months ended
May 31, 2008 was $10.2 million compared to $4.1 million in the prior year, an
increase of $6.1 million. Fixed asset expenditures during the first nine
months of fiscal 2008 totaled $7.2 million for technical production equipment
- primarily for high definition television broadcasting, $0.2 million for
computer equipment, $0.8 million for computer software and video - primarily
relating to the Company's development of theScore.com, and $2.6 million for
leasehold improvements. Fixed asset expenditures were offset by proceeds from
the sale of investments in the amount of $0.5 million.
    For fiscal 2008, the Company anticipates its capital expenditure program
will amount to approximately $15 million. These expenditures include the
completion of a new high definition television studio and high definition
television equipment, developing a 'street-front' presence at The Score's
broadcast facilities in Toronto, and continued development expenditures for
Score Mobile, theScore.com and other interactive initiatives. The 2008 capital
expenditure program will be financed by cash flows from operations, cash and
cash equivalents on hand, and the Company's revolving credit facility.
    Other than the credit facility described above, the Company has no other
financial instruments and thus believes that there are no price, credit or
liquidity risks that it could be subject to from such instruments.

    %SEDAR: 00003035E




For further information:

For further information: Brian Merker, Vice President, Finance, (416)
977-6787

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