[CanWest Logo]
NEWS RELEASE
For Immediate Release
January 21, 2004
CanWest reports 19% increase in First Quarter Net Earnings
International Operations and Newspapers Boost Q1 Results
WINNIPEG, CanWest Global Communications Corp. today reported its financial
results for the three months ended November 30, 2003, the first quarter of its
2004 fiscal year. Consolidated net earnings were $81 million or $0.46 per share,
representing a 19% increase from the $68 million or $0.39 per share reported for
the first quarter of fiscal 2003.
On a combined basis, including the Company's 57.0% proportional share of Network
TEN, earnings before interest, taxes, depreciation and amortization (EBITDA)
were $208 million. This result reflects a small improvement from the pro forma
combined EBITDA of $207 million recorded for the same period last year. Combined
revenues of $719 million for the quarter were in line with pro forma combined
revenues for the same quarter last year. Actual combined revenues for the prior
year were $740 million.
Pro forma results for fiscal 2003 provide a comparison based upon the same asset
base as existed for the period ended November 30, 2003. Pro forma results for
the quarter ended November 30, 2002 therefore exclude the revenue and EBITDA
contributions of certain newspapers assets in Ontario that were sold on February
15, 2003.
On a consolidated basis, revenues for the three month period ended November 30,
2003 were $586 million compared to consolidated revenues of $634 million for the
same period in the previous year. On a pro forma basis revenues were $610
million for the first quarter of fiscal 2003. Consolidated EBITDA in the first
quarter of fiscal 2004 was $153 million compared to reported EBITDA of $177
million for the first quarter of fiscal 2003. On a pro forma basis, consolidated
EBITDA for the first quarter of fiscal 2003 was $170 million.
Overall, strong revenue performances in the Company's South Pacific operations,
particularly Network TEN, were offset by reductions in revenue from Canadian
broadcast operations and Entertainment division. After relatively strong
performance during the summer months the Canadian television industry
experienced declining advertising sales in the quarter, and results from the
Company's broadcast operations reflect that overall market weakness, where
revenues for the quarter were $191 million this year compared to $215 million in
the same period last year. The decline in revenue had a direct impact on EBITDA,
reducing EBITDA to $56 million in the current quarter compared to $81 million
for the same quarter in the prior period. Entertainment revenues were $34
million, down from $48 million last year, reflecting the division's reduced
production slate and continuing weak demand for programming in international
markets.
A steady newspaper advertising market contributed to publishing revenues of $303
million, up 2% from pro forma revenues of $297 million for the corresponding
period last year. Stable
1
newsprint pricing and operating cost reductions resulted in an increase in
EBITDA for the quarter of 11% to $83 million from the pro forma result of $75
million for the first quarter of fiscal 2003.
The Company's international operations registered significant gains in the
quarter. Network TEN reported record quarterly television revenues and EBITDA,
with CanWest's 57.0% interest in TEN's EBITDA increasing by 42% to $53 million
compared to $37 million in the same period last year. TEN again led the
Australian television industry in ratings in its target 16-39 demographic, while
also making gains in overall ratings. Eye Corp, TEN's out-of-home advertising
division, also registered significant improvements with a 10% increase in
revenues to $11 million, and generating EBITDA of over $2 million for the
quarter.
The Company's 3 and C4 Television Networks in New Zealand (formerly referred to
as TV3 and TV4 respectively) reported aggregate EBITDA of $10 million, a 36%
increase from the $7 million for the first quarter of fiscal 2003. New Zealand
radio operations registered a 32% increase in EBITDA to $7 million compared to
$5 million for the first quarter of fiscal 2003. CanWest's 45% interest in TV3
Ireland's EBITDA was $4 million for the quarter, about the same as last year.
Highlights for the quarter and the period since November 30, 2003 include the
following:
o Global's Survivor VII continues to be the highest rated television program
in both the Toronto and Vancouver markets among both 18-49 year olds and
25-54 year olds. During the fall ratings period, CanWest had 12 of the top
25 programs in Toronto and 17 of the top 25 in Vancouver among 18-49 year
olds, compared to 10 and 5 programs respectively for its main competitor.
o In October, CanWest re-launched TV4, the Company's second television
network in New Zealand, as C4, a music channel geared to youth and young
adult audiences. Initial audience response to the new format has been very
positive and, given the relatively low production costs of the new format,
the Company is optimistic that C4 will reverse the losses incurred by TV4
in recent years. TV3 had previously been re-branded as 3 Television.
o In November, CanWest launched a new four tiered-system for access to its
online services including a new electronic version of the Ottawa Citizen
that provides subscribers with 5:00 a.m. Internet access to their daily
newspaper in the same format as the home delivered paper. This new
subscription service became available for the National Post in January and
will roll out at other CanWest newspapers over the next several months.
o In October, the Company announced the appointment of the Honourable Frank
McKenna P.C. Q.C. as Interim Chairman of the Board, following the sudden
passing on October 7, 2003 of I.H.Asper O.C., O.M., Q.C.
o On December 17, the company announced the nomination of two new independent
directors, Mr. Paul V. Godfrey and Professor Ronald J. Daniels, both of
Toronto, Ontario, to stand for election to the Company's Board of Directors
at the forthcoming annual general meeting of shareholders to be held in
Montreal on January 29th, 2004.
o In December, Network TEN, secured a new five-year A$700 million syndicated
loan facility on favourable terms, that will help to reduce TEN's financing
costs
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o In January, the Company received the previously announced distributions of
interest and dividends from Network TEN. In total the Company received $100
million (A$103.5 million).
Commenting on the results, Leonard Asper, CanWest's President and Chief
Executive Officer, said, "For the most part, CanWest's media operations
performed well, particularly our television operations in Australia and New
Zealand, which outpaced the growth of the television industries and the overall
economies of those countries. Our newspapers also experienced year-over-year
gains, during a period in which the Canadian economy was still recovering from
the well-known setbacks from SARS, massive forest fires, Mad Cow disease and a
power blackout in Ontario during the summer months. However, the Canadian
television market struggled during the quarter, and declining advertising sales
evident across the television industry in the Fall months did not reflect the
improving Canadian economy."
"Looking ahead we expect the positive momentum of our international operations
to continue. In Canada we remain optimistic that advertising markets will
increasingly reflect the underlying health in the Canadian economy and there are
signs that this is beginning to occur. The Fall schedule of Global Television
includes a number of promising new shows, including The Apprentice and Average
Joe, that should add positive momentum to our television operations. The Company
continues to focus on cost savings through aggressive pursuit of operating
efficiencies, while also registering revenue gains from the sale of multi-media
advertising packages at both local and national levels. As before, our main
priorities are to accelerate the reduction of corporate debt, improve operating
margins and increase profits," 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 web site
www.canwestglobal.com.
CanWest Global Communications Corp. (NYSE: CWG; TSX: CGS.S and CGS.A,
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, Web sites and radio networks in Canada, New Zealand,
Australia, Ireland and the United Kingdom. The Company's program production and
distribution division operates in several countries throughout the world.
For more information, please contact:
Geoffrey Elliot or John Maguire
Vice President, Corporate Affairs Chief Financial Officer
Tel: (204) 956-2025 Tel: (204) 956-2025
Fax: (204) 947-9841 Fax: (204) 947-9841
gelliot@canwest.com jmaguire@canwest.com
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CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED NOVEMBER 30
(UNAUDITED)
(In thousands of Canadian dollars)
<Table>
<Caption>
2003 2002
------ ------
Revenue 586,129 633,563
Operating expenses 292,703 302,293
Selling, general and administrative expenses 140,830 154,767
---------- ---------
152,596 176,503
Amortization of intangibles 4,375 4,375
Amortization of property, plant and equipment 18,467 19,211
Other amortization 1,305 1,382
---------- ---------
Operating income 128,449 151,535
Interest expense (81,948) (89,885)
Interest income 4,700 -
Amortization of deferred financing costs (2,531) (2,442)
Interest rate swap gains (losses) (495) 14
Foreign exchange gains (losses) 4,984 (19)
Investment gains 249 -
Dividend income 1,415 1,533
---------- ---------
54,823 60,736
Provision for income taxes 12,557 17,748
---------- ---------
Earnings before the following 42,266 42,988
Interest in earnings of Network TEN 38,893 25,777
Interest in loss of other equity accounted affiliates (163) (330)
Realized currency translation adjustment 500 -
---------- ---------
Net earnings for the period 81,496 68,435
============ =========
Net earnings per share
Basic $0.46 $0.39
Diluted $0.46 $0.36
</Table>
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The following financial information has been prepared on a combined basis to
proportionately consolidate the Company's 57.0% interest in Network TEN. This
financial information is supplemental to the Company's consolidated financial
statements and is designed to provide more complete disclosure of the scope of
the Company's operations.
CANWEST GLOBAL COMMUNICATIONS CORP.
COMBINED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED NOVEMBER 30
(UNAUDITED)
(in thousands of Canadian dollars)
<Table>
<Caption>
2003 2002
------- -------
Revenue 718,740 740,009
Operating expenses 504,702 520,725
------- -------
Operating profit before undernoted 214,038 219,284
Corporate expenses 6,313 4,887
------- --------
Operating profit before amortization (EBITDA) 207,725 214,397
Amortization of intangibles 4,375 4,375
Amortization of property, plant and equipment 20,843 21,228
Other amortization 1,398 1,471
------- -------
Operating income (EBIT) 181,109 187,323
Interest expense (85,402) (92,554)
Interest income 4,700 -
Amortization of deferred financing costs (2,531) (2,442)
Interest rate swap gains 540 14
Foreign exchange gains (losses) 4,984 (19)
Investment gains 249 -
Dividend income 1,415 1,533
------- -------
Earnings before income taxes (EBT) 105,064 93,855
Provision for income taxes 23,905 25,090
------- -------
Earnings before the following 81,159 68,765
Interest in loss of equity accounted affiliates (163) (330)
Realized currency translation adjustment 500 -
------- -------
Net earnings for the period 81,496 68,435
======= =======
Net earnings per share:
Basic $0.46 $0.39
Dilute $0.46 $0.36
</Table>
<Table>
CANWEST GLOBAL COMMUNICATIONS CORP.
COMBINED BUSINESS SEGMENT INFORMATION(1)
(UNAUDITED)
(in thousands of Canadian dollars)
For the three months ended November 30
-------------------------------------------------
2003 2002 2002
Actual Actual Proforma
-------- -------- --------
(2)
REVENUE
Television
Canada 191,457 214,506 214,506
Australia - Network TEN 121,387 96,239 96,239
New Zealand - 3 and C4 30,863 26,211 26,211
Ireland - TV3 9,860 10,101 10,101
-------- -------- --------
353,567 347,057 347,057
Radio - New Zealand 21,358 17,845 17,845
Entertainment - Canada 34,225 48,044 48,044
Publishing and Online - Canada 303,458 319,896 296,668
Outdoor - Australia 11,224 10,207 10,207
Intersegment revenues (5,092) (3,040) (3,040)
--------- -------- --------
TOTAL REVENUE 718,740 740,009 716,781
======== ======== ========
OPERATING PROFIT
Television
Canada 56,170 81,397 81,397
Australia - Network TEN 52,640 37,025 37,025
New Zealand - 3 and C4 9,861 7,243 7,243
Ireland - TV3 3,724 3,987 3,987
-------- -------- --------
122,395 129,652 129,652
Radio - New Zealand 7,087 5,354 5,354
Entertainment - Canada (1,086) 1,615 1,615
Publishing and Online - Canada 83,153 81,794 74,869
Outdoor - Australia 2,489 869 869
-------- -------- --------
SEGMENT OPERATING PROFIT 214,038 219,284 212,359
Corporate expenses 6,313 4,887 4,887
-------- -------- --------
OPERATING PROFIT (EBITDA) 207,725 214,397 207,472
======== ======== ========
</Table>
(1) Combined results include the Company's 57.0% economic interest in Network
TEN.
(2) Proforma results exclude the results of Community newspapers sold
February 14, 2003.