Score Media Reports Q1 2008 Results



    Home for the Hardcore continues to grow its core asset and exciting new
    platforms

    TORONTO, Jan. 9 /CNW/ - Score Media Inc. (TSX: SCR) announces its
financial results for the three months ended November 30, 2007:

    
    -   Revenue for the three months ended November 30, 2007 was $9.3
        million, compared to $9.2 million in the prior year.

    -   EBITDA (see "Definitions") for the three months ended November 30,
        2007, was $1.2 million compared to $2.0 million in the same period
        last year. These results were in line with the Company's
        expectations, as during the three months ended November 30, 2007,
        operating costs increased as planned reflecting increased spending
        for high definition television programming, increased rights fees,
        and increased investment in the Company's new business units.

    -   Net income for the three months ended November 30, 2007 was
        $0.1 million, compared to $0.9 million in the prior year, reflecting
        increased operating costs referred to above.

    -   In October 2007, Hardcore Sports Radio and The Score launched
        'Hardcore Hockey Talk', a cross-platform interactive hockey talk show
        featuring Steve Kouleas.

    -   On November 23, 2007, The Score broadcasted the Canadian
        Interuniversity Sports football championship, the Vanier Cup, in high
        definition and achieved a record audience. The Vanier Cup was also
        webcasted live for the first time in the event's history on
        theScore.com.

    -   The Score's website underwent a major site redesign in fiscal 2007,
        and transformed from a complementary source of data for The Score
        Television Network to a sports portal with its own unique peer-driven
        culture and user generated content. The first component of the new
        website, a March Madness portal featuring exclusive video content and
        tournament analysis, was launched in March 2007, concurrent with
        Score Media's cross platform coverage of NCAA March Madness. New site
        features, including full data feeds, live game logs and web-exclusive
        video content were introduced during the NHL and NBA playoffs. By the
        end of October 2007, the site re-launch was complete and the site was
        re-named theScore.com.
    

    "This has been a rewarding quarter for Score Media, as we invest in
exciting new media initiatives and interactive assets, while continuing to
grow our television network," said John Levy, Chairman and Chief Executive
Officer of Score Media Inc. "Our performance and financial results in Q1 2008
were in line with our expectations - reflecting planned expenditures and the
strength of The Score Television Network and the sports media platform that we
are building."
    "We continue to lead the Canadian sports media industry with the
development of related sports media properties and applications such as
Hardcore Sports Radio, Score Mobile and our new website, thescore.com," said
Levy. "These new initiatives, in combination with the core of our platform,
The Score Television Network, increase the depth of our relationship with
hardcore sports fans and offer strong growth potential for our business."

    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 6.2 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.



    Q1 2008 RESULTS

    The following table reconciles net income to EBITDA:

    
    -------------------------------------------------------------------------
                                       Three months ended  Three months ended
                                             November 30,        November 30,
                                                     2007                2006
    -------------------------------------------------------------------------
                                                  (000's)             (000's)

    Net income for the period                     $   148            $   871

    Add back:
      Depreciation and amortization                   572                368
      Interest expense (net)                           12                 40
      Income tax expense                              475                758
    -------------------------------------------------------------------------
    EBITDA                                        $ 1,207            $ 2,037
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Results

    The following selected quarterly financial data of the Corporation relates
to the eight quarters ended November 30, 2007.

    -------------------------------------------------------------------------
                                                            Income
                               Income     Income           per share
                                from     from dis-            from     Income
    Quarterly                continuing  continued    Net  continuing   per
    Results         Revenue  operations operations  income operations  share
    -------------------------------------------------------------------------
                    ($000's)  ($000's)   ($000's)  ($000's)    ($)      ($)
    -------------------------------------------------------------------------
    November 30,
     2007            9,290       148         -       148      0.00      0.00
    -------------------------------------------------------------------------
    August 31,
     2007            7,218       931         -       931      0.01      0.01
    -------------------------------------------------------------------------
    May 31, 2007     9,364       723         -       723      0.01      0.01
    -------------------------------------------------------------------------
    February 28,
     2007            7,731       262         -       262      0.00      0.00
    -------------------------------------------------------------------------
    November 30,
     2006            9,221       871         -       871      0.01      0.01
    -------------------------------------------------------------------------
    August 31,
     2006            6,935     9,805         -     9,805      0.11      0.11
    -------------------------------------------------------------------------
    May 31, 2006     8,010     1,618        91     1,709      0.02      0.02
    -------------------------------------------------------------------------
    February 28,
     2006            6,750       413         -       413      0.00      0.00
    -------------------------------------------------------------------------
    

    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 November 30, 2007

    Revenue for the three months ended November 30, 2007 increased by
$0.1 million to $9.3 million compared to $9.2 million in the prior year. This
revenue increase was due to a combination of greater television subscriber
revenue and increased revenues from Hardcore Sports Radio and Score Media's
interactive properties that were launched during the past 2 years, which was
partially offset by decreases in television advertising revenue relating to
interactive poker.
    Television subscriber revenue increased approximately $0.1 million in the
first quarter reflecting continued growth in the subscriber base with several
broadcast distribution undertakings, compared to the first quarter of fiscal
2007. The new business units provided increased revenue of approximately
$0.4 million compared to the first three months of fiscal 2007. Television
advertising revenue decreased by approximately $0.4 million in the first
quarter of fiscal 2008 compared to the prior year, reflecting successes in
broadcasting several live event sports programs in fiscal 2007 and interactive
poker advertising that were not replicated in the first quarter of fiscal
2008.

    Production and other direct expenses were $4.4 million for the three
months ended November 30, 2007 compared to $3.7 million in the prior year, an
increase of $0.7 million. This increase in operating expenses resulted from
higher programming expenses associated with the Company's new business
initiatives and more live event programming expenses (particularly high
definition costs) amounting to $0.6 million, and increased sports data
acquisition expenses amounting to $0.1 million.

    Selling, general and administrative expenses were $2.5 million for the
three months ended November 30, 2007 compared to $2.7 million in the prior
year, a decrease of $0.2 million. This decrease resulted from reduced license
fees of $0.1 million, as well reductions in marketing expenses during the
quarter in the amount of $0.1 million.

    Program rights expenses were $1.1 million during the quarter, an increase
of $0.4 million compared to $0.7 million in the prior year. The increase in
program rights at The Score reflects higher program rights fees for EPL
soccer, NBA basketball, and NCAA football.

    EBITDA was $1.2 million compared to $2.0 million in the same period last
year, a decrease of $0.8 million which was in line with the Company's
expectations. During the three months ended November 30, 2007, operating costs
increased as planned reflecting increased spending for high definition
television programming, increased rights fees, and increased investment in the
Company's new business units.

    Interest expense (net) for the first quarter was approximately nil
compared to approximately nil in the same period last year.

    Depreciation and amortization expense increased $0.2 million in the first
quarter to $0.6 million compared to $0.4 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 first quarter, fixed asset additions were
$1.2 million compared to $1.7 million in the prior year; fixed asset additions
were due to upgrading television broadcasting infrastructure in preparation
for the introduction of a "high definition" rebuild, and for new software and
computer equipment to support the new interactive properties.

    Net income for the three months ended November 30, 2007 was $0.1 million
or $0.00 per share based on a diluted weighted average 99.0 million Class A
Subordinate Voting Shares and Special Voting Shares outstanding, compared to
$0.9 million or $0.01 per share based on a diluted weighted average 96.6
million Class A Subordinate Voting Shares and Special Voting Shares
outstanding in the prior year.
    During the three months ended November 30, 2007, net income was net of
income tax expense of $0.5 million compared to $0.8 million in the same period
last year, a decrease of $0.3 million. The Company's effective tax rate was
approximately 76% (2006 - 47%), compared to a statutory tax rate of 35%, due
to a valuation allowance being recorded against operating losses of certain
entities in the consolidated group.
    In December 2007, a federal corporate tax rate reduction was implemented
by the government. The Company estimates that the impact of this rate
reduction in the second quarter of 2008 will be a reduction of the future tax
asset by $0.5 million.

    Liquidity and Capital Resources

    Cash flows provided by operations for the three months ended November 30,
2007 were $1.3 million compared to $1.8 million in the prior year. The
decrease in cash flows provided by operations of $0.5 million reflects a
decline in net income, which was partially offset by movements in non-cash
working capital.

    Cash flows used in financing activities for the three months ended
November 30, 2007 were $4.0 million compared to $0.2 million in the prior
year, an increase of $3.8 million. During the first quarter of 2008 the
Company reduced borrowings under its bank credit facility by $4.0 million.
    On August 28, 2007, the Company entered into a new $25 million revolving
three-year term credit facility with a Canadian chartered bank. On August 31,
2007, the Company drew $9.3 million from the credit facility with the proceeds
used to retire the existing term loan then in existence. 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 (earnings before interest, taxes, depreciation and
amortization) 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 shareholder and inter-company loans.
    As of November 30, 2007 the Company had drawn $5.2 million from the
credit facility. The Company believes that its cash and cash equivalents,
together with the bank credit facility provides it with sufficient working
capital to support its operations for the foreseeable future.

    Cash flows used in investing activities for the three months ended
November 30, 2007 were $1.2 million compared to $1.7 million in the prior
year, a decrease of $0.5 million. Fixed asset expenditures during the first
quarter of fiscal 2008 totaled $0.3 million for technical production
equipment - primarily for high definition television broadcasting, $0.1
million for computer equipment, $0.4 million for computer software and
video - primarily relating to the Company's development of thescore.com, and
$0.4 million for leasehold improvements.
    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
location, 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, and cash and cash
equivalents on hand.
    Other than the credit facilities 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.

    Contractual Obligations

    The Company has no debt guarantees, capital leases or long-term
obligations other than loans which are disclosed on the Consolidated Balance
Sheets as at November 30, 2007, and August 31, 2007 and the notes thereto.
    Contractual operating obligations as at November 30, 2007 for the fiscal
years noted below are as follows:

    
    -------------------------------------------------------------------------
    Contractual
     Obligations
     (in thousands                                             There-
     of dollars)        2008    2009    2010    2011    2012   after   Total
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Operating lease
     obligations       1,486   1,452   1,230     728     578   1,167   6,641
    -------------------------------------------------------------------------
    Programming
     rights
     obligations       2,309   1,938   2,026      30       -       -   6,303
    -------------------------------------------------------------------------
    Long-term debt
     obligations           -       -   5,235       -       -       -   5,235
    -------------------------------------------------------------------------
    Total              3,795   3,390   8,491     758     578   1,167  18,179
    -------------------------------------------------------------------------
    

    Related Party Transactions

    During the three months ended November 30, 2007, the Company obtained
consulting services from a director of the Company. The services were provided
in the ordinary course of business and amounted to $8,000 (2006 - $8,000).
    The Company entered into a lease in December 2005 for a property
partially owned by a director and officer of the Company. The lease ended
August 31, 2006 and continued on a month-to-month basis until May 15, 2007
when the Company entered into a five year lease for such premises; the
aggregate rent paid during the three months ended November 30, 2007 amounted
to $8,000 (2006 - $35,000).
    All related party transactions have been reported at their fair values.
    The Company announced on June 20, 2007 that its controlling shareholder,
Levfam Holdings Inc. ("Levfam") had delivered a notice to CW Media Inc. ("CW
Media"), a shareholder of the Company, offering to sell all of the Class A
Subordinate Voting Shares and Special Voting Shares of the Company held by
Levfam and its affiliates and associates for a price of $2.90 per share.
    Levfam's notice was provided pursuant to a Respective Rights Agreement
made November 24, 2000, to which Levfam, CW Media and the Company are parties.
The provisions of the Respective Rights Agreement provided that CW Media had a
30 day period in which to choose to accept the offer set forth in the notice,
and as CW Media did not accept the offer, Levfam had a period of 120 days
during which it could have entered into a binding agreement to sell its shares
in the Company to one or more third parties, provided that such sale was made
for a price and on terms and conditions no more favourable than those offered
to CW Media in the notice. The 120 day period expired on November 17, 2007.

    %SEDAR: 00003035E




For further information:

For further information: Patrick Michaud, Executive Vice President and
CFO, (416) 977-4975

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