(CANWEST LOGO)
NEWS RELEASE
For Immediate Release
July 15, 2004
THIRD QUARTER EARNINGS FROM CONTINUING OPERATIONS UP 101%
EBITDA up 50% at TEN Group, Publishing EBITDA up 4%
Proceeds from New Zealand IPO and the sale of Ulster Television shares will
reduce CanWest Media Inc. bank debt by approximately $400 million in Q4
WINNIPEG: CanWest Global Communications Corp. today reported its third quarter
financial results, for the period ended May 31, 2004. Net earnings were $54
million or $0.31 per share, up 335% from net earnings of $12 million or $0.07
per share last year. Net earnings from continuing operations for the quarter
were $52 million or $0.30 per share, up $26 million or 101% compared to net
earnings from continuing operations for the third quarter last year of $26
million or $0.15 per share.
In its public reporting, the Company provides revenue and EBITDA on both a
consolidated basis and combined basis. In the consolidated financial results,
the Company accounts for its investment in TEN Group on an equity basis, which
excludes revenues and EBITDA of TEN from consolidated revenues and EBITDA. The
combined results include the Company's 56.6% proportionate share of TEN's
revenue and EBITDA.
The Company's consolidated revenues for the three-month period were $565 million
compared to consolidated revenues of $558 million for the same period in 2003.
Consolidated earnings before interest, taxes, depreciation and amortization
(EBITDA) in the third quarter were $143 million compared to consolidated EBITDA
of $141 million for the corresponding period last year.
Consolidated revenues for the nine-months ended May 31, 2004 were $1,610 million
compared to pro forma consolidated revenues of $1,603 million for the same
period in 2003. Consolidated EBITDA for the nine months ended May 31, 2004 was
$388 million compared to pro forma consolidated EBITDA of $403 million for the
same period in 2003. Pro forma results for the nine-month period in 2003 exclude
the revenue and EBITDA contributions of newspaper assets that were sold in
February 2003.
FINANCIAL HIGHLIGHTS:
Three months ended May 31, 2004:
- Combined revenue increased $28 million or 4% from last year to $682
million
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- Combined EBITDA increased $13 million or 8% from last year to $177
million
Nine months ended May 31, 2004:
- Combined revenue increased $75 million or 4% from the pro forma
result last year, to $1,952 million
- Combined EBITDA increased $24 million or 5% from the pro forma
result last year, to $506 million
Overall, exceptional results generated by the Company's South Pacific
broadcasting operations, led by the TEN Group, together with EBITDA growth in
Canadian newspaper operations, were responsible for the increase in combined
EBITDA.
Leonard Asper, CanWest's President and Chief Executive Officer, commenting on
the third quarter and nine-month results, said "CanWest moved forward
operationally and on a number of important strategic initiatives in the third
quarter that will help to position the Company for future growth. The
outstanding results at TEN Group and our New Zealand broadcast assets continue
to demonstrate the value of CanWest's position as a diversified international
media company. Our newspaper operations were successful in recording a
significant EBITDA gain in a difficult Canadian advertising market and results
from our Canadian television operations continued to improve. Fireworks is no
longer a drain on the Company's income statement and we believe we have a modest
but profitable content development strategy. The recent sale of our stake in
Ulster TV and the IPO in New Zealand are consistent with our long stated
objective of monetizing certain of our overseas assets. Proceeds from these
transactions will further strengthen CanWest's balance sheet. The successful
refinancing of our bank debt in June reduces future financing expense and,
together with certain covenant amendments, further improves the financial
flexibility of the Company."
In the combined results, the Company's 56.6% share of revenues of Network TEN
increased by 24% to $107 million for the quarter, from $86 million reported for
the same period last year. TEN's EBITDA increased by 46% to $31 million for the
quarter, compared to $22 million for the same quarter last year. TEN's
outstanding financial performance was a direct result of strong ratings, the
network's increased share of the television advertising market and its
consistent success in controlling costs. TEN was again number one in its target
audience of 16-39 year-olds and appears poised to maintain that first place
position in its target demographic for the fourth year in a row. For the first
time, TEN gained second place in the wider 25-54 year-old demographic in the
third quarter, further evidence of the strength and broader appeal of TEN's
schedule. Eye Corp, TEN's out-of-home advertising division, registered a 16%
increase in revenues to $11 million for the third quarter, generating EBITDA of
over $2 million, more than double the level recorded last year for the same
period.
The Company's TV and radio operations in New Zealand reported aggregate EBITDA
of $11 million for the quarter compared to $4.5 million for the third quarter
last year, a 137% increase.
CanWest's 45% interest in TV3 Ireland's EBITDA was $3 million for the quarter,
9% higher than for the third quarter of 2003.
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Publishing EBITDA increased by 4% to $74 million compared to $72 million for the
corresponding quarter last year on quarterly revenues of $300 million, which
were unchanged from the corresponding period last year.
Revenues from Canadian broadcasting operations of $207 million were unchanged
from the previous year's third quarter result. EBITDA for Canadian broadcasting
operations was $61 million, 26% lower than for the corresponding period in 2003.
The decline in EBITDA was partially due to increased investment in new
programming.
As previously announced, the Company has initiated a process to sell Fireworks'
library of Canadian and international film and television program rights. As a
result, all of Fireworks' operations have now been classified as discontinued.
The Company's financial results for prior periods have been reclassified on this
basis. The Company recorded net earnings from discontinued operations of $2
million in the third quarter, compared to a net loss of $14 million for the same
operations in the third quarter last year.
For the nine-month period ended May 31, 2004, the Company recorded net earnings
from continuing operations of $135 million or $0.76 per share, compared to net
earnings from continuing operations of $107 million or $0.56 per share for the
nine months ended May 31, 2003. Net earnings in 2003 included a gain of $21
million on the sale of certain Ontario small market newspapers.
For the nine months ended May 31, 2004, the loss from discontinued operations
amounted to $210 million, primarily related to non-cash charges to adjust the
carrying value of the Fireworks' film and television production and distribution
operations to their estimated fair value. The loss from the same operation for
the same nine-month period in the previous year was $16 million. Including the
results of discontinued operations and non-cash charges associated with
adjustments to the carrying value of discontinued operations, the Company
recorded a net loss of $75 million or $0.43 per share for the nine months ended
May 31, 2004 compared to net earnings of $91 million or $0.47 per share for the
same period in 2003.
HIGHLIGHTS FOR THE QUARTER:
Highlights for the quarter and the period since May 31, 2004 include the
following:
- CanWest's New Zealand broadcasting properties were offered to the
public in New Zealand by way of an IPO of ordinary shares of CanWest
MediaWorks (NZ) Limited, a newly incorporated New Zealand company.
The IPO opened June 30, 2004 and will close on July 21, 2004. The
IPO is expected to raise NZ$104 million (approximately $90 million).
On completion, CanWest MediaWorks (NZ) Limited will use the funds
raised from the share issue, together with a concurrent bank
financing and further issuance of shares to CanWest, to acquire all
of CanWest's New Zealand television and radio operations. CanWest is
expected to hold 70% of the new company. Proceeds to CanWest are
expected to be NZ$300 million (approximately $259 million) in cash
plus approximately 158.7 million ordinary shares of CanWest
MediaWorks (NZ) Limited. Cash proceeds will be used to reduce bank
debt. CanWest will record a gain of approximately $50 million in its
fourth quarter.
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- On June 30, the Company sold its 29.9% holding of common shares of
Ulster Television Plc. in a transaction effected through the London
Stock Exchange. The cash proceeds from the transaction of
approximately GBP59 million (approximately $145 million) were used
to reduce bank debt. CanWest will record a gain on the sale of the
UTV shares of approximately $50 million in the fourth quarter.
- In June, the Company successfully refinanced approximately $911
million of its existing senior secured credit facilities. The
refinancing, at current favourable market terms, results in an
annual interest savings of approximately $5 million and extends
maturity of the facilities until August 2009. The refinancing also
included a number of amendments to financial covenants that will
increase the Company's financial flexibility going forward.
- CanWest Television (Global TV Network and CH) has overtaken CTV
(includes Toronto and Kitchener CTV stations) to regain first place
in prime time market share in the key extended Toronto and Vancouver
markets in the Spring 2004 season (January-May), based on statistics
compiled by BBM Canada for adult viewers, 18-34, 18-49 and 25-54
years. This positive momentum is a direct result of Global's
significant investment in new programming and the positive viewer
response to Global's impressive roster of new reality, sit-com and
drama shows, which include The Apprentice, Average Joe, Two and a
Half Men and Las Vegas.
- CanWest's newest radio station, The Beat 91.5 FM launched in
Kitchener, Ontario, in February, 2004, got off to an unprecedented
start for a new station, placing second in audience ratings in a
nine radio station market, among its target audience of young adults
(18-34) and fourth among all listeners.
- The Company completed its roll-out of web-based electronic editions
of its newspapers with subscriptions now available at the National
Post and all the Company's large city newspapers including the
Ottawa Citizen, Vancouver Sun, Vancouver Province, Victoria
Times-Colonist, Calgary Herald, Edmonton Journal the Montreal
Gazette, Regina Leader-Post, Saskatoon StarPhoenix and Windsor Star.
Initial interest in electronic editions has been encouraging, with
significant numbers of new subscribers being readers who did not
previously subscribe to the newspapers.
"Looking ahead we expect the strong performance of our international operations
to continue through the balance of 2004. CanWest Publications continues to
perform well, and we expect improvement in our broadcasting operations in the
coming months. The Company continues to look at modest growth and expansion
opportunities in Canada and elsewhere but, as before, our main priorities are to
accelerate the reduction of corporate debt, improve operating margins and
increase profits," Leonard 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 website,
www.canwestglobal.com.
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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, radio networks and Web sites in Canada, New Zealand,
Australia, and The Republic of Ireland.
(30)
For more information, please contact:
Geoffrey Elliot John Maguire
Vice President, Corporate Affairs Chief Financial Officer
Ph: (204) 956-2025 Ph: (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. (1)
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS)
FOR THE THREE MONTHS ENDED MAY 31
---------------------------------
2004 2003
ACTUAL ACTUAL
REVENUE
TELEVISION
Canada 207,483 207,635
Australia - Network TEN 106,857 86,054
New Zealand - 3 and C4 27,180 24,096
Ireland - TV3 9,423 8,556
-------- --------
350,943 326,341
RADIO - NEW ZEALAND 20,833 17,644
PUBLICATIONS AND ONLINE - CANADA 299,680 300,566
OUTDOOR - AUSTRALIA 10,986 9,478
-------- --------
TOTAL COMBINED REVENUE(1) 682,442 654,029
Elimination of equity accounted affiliates(2) (117,843) (95,532)
-------- --------
TOTAL CONSOLIDATED REVENUE 564,599 558,497
======== ========
OPERATING PROFIT
TELEVISION
Canada 61,322 82,944
Australia - Network TEN 31,412 21,562
New Zealand - 3 and C4 4,748 90
Ireland - TV3 2,993 2,736
-------- --------
100,475 107,332
RADIO - NEW ZEALAND 5,927 4,421
PUBLICATIONS AND ONLINE - CANADA 74,269 71,757
OUTDOOR - AUSTRALIA 2,116 777
-------- --------
SEGMENT OPERATING PROFIT 182,787 184,287
Corporate expenses 6,120 6,728
Restructuring expenses -- 14,136
-------- --------
COMBINED OPERATING PROFIT (EBITDA)(1) 176,667 163,423
Elimination of equity accounted affiliates(2) (33,528) (22,339)
-------- --------
CONSOLIDATED OPERATING PROFIT (EBITDA) 143,139 141,084
======== ========
(1) Segmented results include the Company's 56.6% economic interest in Network
TEN.
(2) Elimination of proportionate interest in Australia's Network TEN and
Outdoor, which are equity accounted in the consolidated financial
statements.
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CANWEST GLOBAL COMMUNICATIONS CORP. (1)
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS)
FOR THE NINE MONTHS ENDED MAY 31
--------------------------------
2004 2003 2003
ACTUAL ACTUAL PROFORMA
(2)
REVENUE
TELEVISION
Canada 559,712 593,461 593,461
Australia - Network TEN 309,920 245,996 245,996
New Zealand - 3 and C4 79,860 69,549 69,549
Ireland - TV3 27,042 26,520 26,520
---------- ---------- ----------
976,534 935,526 935,526
RADIO - NEW ZEALAND 65,299 54,654 54,654
PUBLICATIONS AND ONLINE - CANADA 878,167 898,853 858,897
OUTDOOR - AUSTRALIA 32,441 27,941 27,941
---------- ---------- ----------
TOTAL COMBINED REVENUE(1) 1,952,441 1,916,974 1,877,018
Elimination of equity accounted affiliates(3) (342,361) (273,937) (273,937)
---------- ---------- ----------
TOTAL CONSOLIDATED REVENUE 1,610,080 1,643,037 1,603,081
========== ========== ==========
OPERATING PROFIT
TELEVISION
Canada 147,450 206,833 206,833
Australia - Network TEN 112,274 77,464 77,464
New Zealand - 3 and C4 17,661 7,063 7,063
Ireland - TV3 8,879 8,651 8,651
---------- ---------- ----------
286,264 300,011 300,011
RADIO - NEW ZEALAND 20,944 15,168 15,168
PUBLICATIONS AND ONLINE - CANADA 213,995 206,510 196,405
OUTDOOR - AUSTRALIA 5,885 2,106 2,106
---------- ---------- ----------
SEGMENT OPERATING PROFIT 527,088 523,795 513,690
Corporate expenses 20,657 17,197 17,197
Restructuring expenses -- 14,136 14,136
---------- ---------- ----------
COMBINED OPERATING PROFIT (EBITDA)(1) 506,431 492,462 482,357
Elimination of equity accounted affiliates(3) (118,159) (79,570) (79,570)
---------- ---------- ----------
CONSOLIDATED OPERATING PROFIT (EBITDA) 388,272 412,892 402,787
========== ========== ==========
(1) Segmented results include the Company's 56.6% economic interest in Network
TEN.
(2) Proforma results exclude the results of community newspapers sold February
14, 2003.
(3) Elimination of proportionate interest in Australia's Network TEN and
Outdoor, which are equity accounted in the consolidated financial
statements.
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CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS EXCEPT AS OTHERWISE NOTED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------- -------------------------
MAY 31, MAY 31, MAY 31, MAY 31,
2004 2003 2004 2003
Revenue 564,599 558,497 1,610,080 1,643,037
Operating expenses 281,699 277,507 813,787 803,689
Selling, general and
administrative expenses 139,761 125,770 408,021 412,320
Restructuring expenses -- 14,136 -- 14,136
---------- ---------- ---------- ----------
143,139 141,084 388,272 412,892
Amortization of intangibles 4,375 4,375 13,125 13,125
Amortization of property, plant
and equipment 19,364 17,385 56,353 54,771
Other amortization 1,281 1,313 3,670 5,165
---------- ---------- ---------- ----------
Operating income 118,119 118,011 315,124 339,831
Interest expense (77,651) (89,340) (237,750) (268,502)
Interest income 291 -- 6,242 --
Amortization of deferred financing costs (1,957) (2,372) (5,862) (7,185)
Interest rate swap gains (losses) 6,843 (4,781) (10,200) (13,634)
Foreign exchange gains (losses) (1,360) (495) 3,766 (559)
Investment gains and losses net
of write-down 354 (2,277) (2,460) 19,831
Dividend income 2,323 1,999 3,738 3,532
---------- ---------- ---------- ----------
46,962 20,745 72,598 73,314
Provision for income taxes 9,842 8,451 12,790 15,303
---------- ---------- ---------- ----------
Earnings before the following 37,120 12,294 59,808 58,011
Interest in earnings of Network TEN 20,573 12,428 77,165 49,089
Interest in loss of other
equity accounted affiliates (207) (256) (556) (1,035)
Realized currency translation
adjustments (5,011) 1,593 (1,885) 693
---------- ---------- ---------- ----------
NET EARNINGS FROM CONTINUING
OPERATIONS 52,475 26,059 134,532 106,758
Earnings (loss) from
discontinued operations 1,862 (13,575) (209,976) (15,958)
---------- ---------- ---------- ----------
NET EARNINGS (LOSS) FOR THE PERIOD 54,337 12,484 (75,444) 90,800
========== ========== ========== ==========
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
BASIC $ 0.30 $ 0.15 $ 0.76 $ 0.56
DILUTED $ 0.30 $ 0.15 $ 0.76 $ 0.56
EARNINGS (LOSS) PER SHARE:
BASIC $ 0.31 $ 0.07 ($ 0.43) $ 0.47
DILUTED $ 0.31 $ 0.07 ($ 0.43) $ 0.47
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