(CANWEST GLOBAL LOGO) CANWEST GLOBAL COMMUNICATIONS CORP. NEWS RELEASE For Immediate Release November 2, 2004 CANWEST'S 2004 NET EARNINGS FROM CONTINUING OPERATIONS INCREASE 69% TO $194 MILLION Fourth quarter earnings from continuing operations $60 million, debt reduced WINNIPEG - CanWest Global Communications Corp. today reported financial results for its fourth quarter and for its fiscal year ended August 31, 2004. Consolidated net earnings from continuing operations for the year were $194 million, or $1.10 per share, an increase of 69% as compared to net earnings from continuing operations of $115 million, or $0.60 per share, for the prior year. Net earnings for the year reflected a number of one-time transactions, including gains of approximately $117 million in the fourth quarter on the sale of CanWest's shares in Ulster TV and the effective disposition of a 30% interest in CanWest's New Zealand broadcasting assets. As a result of the early retirement of certain indebtedness, CanWest recorded foreign currency exchange gains of $36 million, the write-off of deferred financing costs of $5 million, interest rate and foreign currency swap losses of $111 million. In addition, a net loss of $208 million from Fireworks Entertainment was recorded in losses of discontinued operations. The net loss for the year was $13 million versus net earnings of $46 million last year. In its public reporting, the Company provides revenue and EBITDA results on both a consolidated basis and a combined basis. The consolidated financial results reflect the Company's investment in the TEN Group on an equity accounted basis, including CanWest's share of TEN's net earnings, but excluding 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. Consolidated and combined net earnings are the same. FINANCIAL HIGHLIGHTS ON A CONSOLIDATED AND COMBINED BASIS For the twelve months ended August 31, 2004: - The Company's consolidated revenues for the year were $2,113 million compared to consolidated pro forma revenues of $2,100 million for the same period in 2003. Pro forma 2003 results provide a comparison based upon the same asset base as existed during the year ended August 31, 2004. Pro forma results for 2003 exclude the revenue and EBITDA contributions of newspaper operations that were sold in February 2003. - Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the year were $447 million compared to pro forma consolidated EBITDA of $469 million for the prior year. 1 - Consolidated and combined net earnings from continuing operations were $194 million, or $1.10 per share, for the year, up 69% from the $115 million, or $0.60 per share, reported for fiscal 2003. - Combined revenues increased by 4% to $2,566 million from pro forma combined revenues of $2,473 million for the prior fiscal year. - Combined EBITDA of $600 million in fiscal 2004 reflected an increase of 6% from the $568 million combined pro forma result for the prior year. For the three months ended August 31, 2004: - Consolidated revenues for the fourth quarter, traditionally a weaker quarter for the media industry, were $470 million compared to $464 million for the same period in 2003. - Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter ended August 31, 2004 were $58 million compared to consolidated EBITDA of $66 million for the corresponding quarter in 2003. - Consolidated and combined net earnings from continuing operations for the fourth quarter were $60 million, or $0.34 per share, compared to $8 million, or $0.05 per share, reported for the same period in fiscal 2003. - Consolidated and combined net earnings for the quarter were $62 million, or $0.35 per share, compared to a loss of $45 million or $0.25 per share for the same period in fiscal 2003. - Combined revenues for the fourth quarter were $580 million, an increase of 3% from combined revenues of $563 million for same quarter of the previous year. - Combined EBITDA were $94 million for the fourth quarter, 9% higher than the $86 million for the fourth quarter of fiscal 2003. Results from continuing operations exclude revenues from Fireworks Entertainment for both years, as Fireworks was classified as a discontinued operation during fiscal 2004. The Company's financial results for prior periods have been reclassified on this basis. The Company recorded a net loss from discontinued operations of $208 million in 2004, compared to $69 million for the prior year. Commenting on the year-end and fourth quarter results, Leonard Asper, CanWest's President and Chief Executive Officer, said "CanWest made important progress on many fronts in 2004 that together resulted in a significant improvement in overall results and that should contribute to positive financial results going forward. All of our international operations, including TV3 Ireland, the TEN Group in Australia and our New Zealand television and radio operations recorded their best ever financial results in 2004, with all of those operations generating substantial improvements in their respective EBITDA. Our newspaper operations also achieved a significant EBITDA gain in a still difficult Canadian advertising market. Together, these strong results more than offset disappointing results from our Canadian television operations and underscore the significant benefit derived from CanWest's diversified international mix of media assets." "The Company's balance sheet strengthened substantially in 2004 as a result of a combination of asset sales, re-financings and the successful IPO of CanWest MediaWorks (NZ) Limited in 2 New Zealand. In October, the Company announced an exchange offer for Hollinger Participation Trust Notes that, if successful, will further improve our balance sheet. All in all, 2004 was a very good year for CanWest," added Mr. Asper. "While debt reduction remains a top priority, our much improved balance sheet now positions us to re-focus on growth, including organic expansion of our existing operations, and through prudent acquisitions, either in growth markets or where we can identify synergies with our existing operations." SEGMENTED RESULTS FOR FISCAL 2004 Revenues for the Company's newspaper and online operations for the year were $1,194 million, 2% higher than pro forma revenues of $1,168 million for the same newspaper assets in fiscal 2003. Newspaper and online EBITDA for the year increased by 8% to $267 million, compared to a pro forma result of $248 million for the previous year. The EBITDA improvement was primarily attributable to increased revenues and operating cost reductions. Total circulation was down slightly, but newsprint costs, a major component of total operating costs, were stable over the year. We were encouraged during the year by the take-up of paid subscriptions to the new electronic newspapers that are now available online for all CanWest major metropolitan newspapers, as well as the National Post. TEN's contribution to CanWest's combined EBITDA increased by 36% to $145 million for the year, the best ever result from TEN. TEN's television network retained its ratings leadership in the 16-39 young adult market and moved into second place in both the older 25-54 demographic and all viewers. Eye Corp, TEN's out-of-home advertising operation, also recorded substantial growth compared to the previous year, with revenues up by 19% and EBITDA by 221%. CanWest MediaWorks (NZ) Limited in New Zealand also booked impressive growth during the year. Revenues at TVWorks were up 14%, and resulted in EBITDA of $23 million in fiscal 2004, an increase of 131% from EBITDA of $10 million in fiscal 2003. RadioWorks' EBITDA was up 32% to $27 million, compared to $21 million last year. TV3 Ireland also maintained a consistent positive growth trend, with CanWest's share of its EBITDA increasing to $11 million for the year, up from $10 million last year. The strong revenue growth trends of F2004 continued at all CanWest's international operations as we moved into F2005. Revenues for the Company's Canadian broadcasting operations for fiscal 2004 declined by 5% to $690 million from $730 million in fiscal 2003. EBITDA for the year was $147 million, a decline of 32% from the $216 million recorded the prior year. The combined effects of lower ratings in 2003, and increased competition for advertising revenues accounted for the decline. However, strong spring ratings arrested the downward trend and there are indications of year-on-year revenue growth at Global Television as we move into the first quarter of fiscal 2005. SEGMENTED RESULTS FOR THE 4TH QUARTER ENDED AUGUST 31, 2004 Newspaper and online operations recorded a 2% gain in revenues to $281 million for the quarter, compared to revenues of $276 million for the fourth quarter of fiscal 2003. EBITDA increased by 3% to $53 million from $52 million last year. The gains were attributable to a combination of a modest improvement in advertising markets and operating cost reductions. CanWest's non-Canadian operations all registered substantial year-over-year gains for the quarter. CanWest's 56.6% share of results of TEN reflected a 12% increase in EBITDA to $33 3 million for the quarter. Eye Corp. continued its strong recovery in the fourth quarter, reporting revenue gains of 30% to $11 million and an increase of more than 400% in EBITDA. Fourth quarter EBITDA at TVWorks in New Zealand increased by 86% to $6 million for the quarter on a 12% gain in revenues to $30 million. RadioWorks registered similar positive momentum, with a 17% gain in EBITDA to $7 million for the quarter on an increase of 14% in radio revenues. CanWest's share of EBITDA from TV3 Ireland increased by 59% to $2 million for the quarter Fourth quarter revenues from Canadian television operations declined by 5% to $131 million compared to $137 million last year. Television operations reported a small EBITDA loss for the quarter. The Athens Olympics, which were carried by another network, also had a detrimental impact on revenues in August. Other highlights of the fourth quarter and for the period following the end of the fiscal year include the following: - CanWest received distributions from Network TEN of A$110 million in fiscal 2004 CanWest will receive interest on its outstanding subordinated debentures of approximately A$39 million in December 2004 as a consequence of TEN's June 2004 dividend distribution. TEN's first distribution of interest and dividends for fiscal 2005, which will be based upon its earnings from July 1, 2004 to December 31, 2004, is expected to be received in January 2005. - In June, the Company successfully refinanced approximately $911 million of its existing senior secured credit facility at current favorable market terms. The refinancing will result in annual interest cost savings of approximately $4.5 million and extends maturity of the facilities until August 2009. The refinancing also included a number of amendments to financial covenants that increase the Company's future financial flexibility. - Also in June, the Company sold its 29.9% shareholding in Ulster Television Plc. The cash proceeds of $144 million were used to reduce bank debt. CanWest recorded a gain on the sale of the UTV shares of approximately $52 million in the fourth quarter. - CanWest MediaWorks (NZ) Limited completed a successful IPO of its shares, raising $84 million (NZ$100 million), and listed on the New Zealand Stock Exchange in July. It used the funds raised from the share issue, together with a concurrent $173 million (NZ$200 million) bank financing and further issuance of 158.7 million shares to CanWest, to acquire all of CanWest's New Zealand television and radio operations. CanWest continues to hold 70% of the new company. Cash proceeds received by the Company of $257 million (NZ$300 million) were used to reduce bank debt. CanWest recorded a gain on the transaction of $66 million in its fourth quarter. - In October, the Company announced an exchange offer for Hollinger Participation Trust Notes that, if successful, will further strengthen the Company's balance sheet. - Also in October, the Company announced the re-alignment of its Canadian and international operations under the CanWest MediaWorks and CanWest MediaWorks International banners. Rick Camilleri was appointed as President of CanWest MediaWorks and Tom Strike was named President of CanWest MediaWorks International. Several other CanWest MediaWorks' senior executive appointments 4 were announced in October, including a new President for Canadian Television and Radio, a new President for CanWest Publications and a new President of Sales and Marketing. CANWEST ANNOUNCES APPOINTMENT TO BOARD OF DIRECTORS Following the regular meeting of the Board on November 2, the Company announced the appointment of Frank King of Calgary to its Board of Directors. Mr. King is President and Chief Executive Officer of Metropolitan Investment Corporation and is the former Chairman and Chief Executive Officer of the XV Olympic Winter Games, which were held in Calgary in 1988. Mr. King, 67, is a Director of the Calgary Chamber of Commerce, Acclaim Energy Inc., Networc Health Inc., The Westaim Corporation, Agrium Inc., and Wi-Lan Inc. and is a Trustee of Rio-Can Real Estate Investment Trust. The Company also announced that it had accepted the resignations of two of its non-independent directors. Leaving the Board are Thomas C. Strike, President of CanWest MediaWorks International and Richard C. Camilleri, President of CanWest MediaWorks, both of whom were elected to the Board on an interim basis in January 2004. This press release contains certain comments or forward-looking statements that are based largely upon 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's financial statements are available on the corporate website: www.canwestglobal.com. CanWest Global Communications Corp. (NYSE: CWG; TSX: CGS.SV and CGS.NV, www.canwestglobal.com) is an international media company, and also Canada's largest media company. In addition to owning the Global Television Network, CanWest is Canada's largest publisher of daily newspapers, and also owns, operates and/or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, Web sites and radio networks in Canada, New Zealand, Australia and Ireland. -30- For further information contact: Geoffrey Elliot Vice President, Corporate Affairs Tel: (204) 956-2025 Fax: (204) 947-9841 gelliot@canwest.com John Maguire Chief Financial Officer Tel: (204) 956-2025 Fax: (204) 947-9841 jmaguire@canwest.com 5 CANWEST GLOBAL COMMUNICATIONS CORP. (1) BUSINESS SEGMENT INFORMATION (UNAUDITED) (IN THOUSANDS OF CANADIAN DOLLARS) FOR THE THREE MONTHS ENDED AUGUST 31 ------------------------------------ 2004 2003 REVENUE TELEVISION Canada 130,590 136,946 Australia - Network TEN 99,284 90,366 New Zealand - 3 and C4 29,682 26,426 Ireland - TV3 7,110 5,970 -------- -------- 266,666 259,708 RADIO - NEW ZEALAND 21,418 18,746 PUBLICATIONS AND ONLINE - CANADA 280,807 276,290 OUTDOOR - AUSTRALIA 11,301 8,715 -------- -------- TOTAL COMBINED REVENUE(1) 580,192 563,459 Elimination of equity accounted affiliates(2) (110,585) (99,081) -------- -------- TOTAL CONSOLIDATED REVENUE 469,607 464,378 ======== ======== OPERATING PROFIT TELEVISION Canada (20) 9,513 Australia - Network TEN 33,054 29,511 New Zealand - 3 and C4 5,630 3,032 Ireland - TV3 1,712 1,078 -------- -------- 40,376 43,134 RADIO - NEW ZEALAND 6,544 5,583 PUBLICATIONS AND ONLINE - CANADA 53,348 51,986 OUTDOOR - AUSTRALIA 2,330 454 -------- -------- SEGMENT OPERATING PROFIT 102,598 101,157 Corporate expenses 6,453 6,016 Restructuring and film and television program impairment expenses 2,445 9,169 -------- -------- COMBINED OPERATING PROFIT (EBITDA)(1) 93,700 85,972 Elimination of equity accounted affiliates(2) (35,384) (19,649) -------- -------- CONSOLIDATED OPERATING PROFIT (EBITDA) 58,316 66,323 ======== ======== (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. 6 CANWEST GLOBAL COMMUNICATIONS CORP. (1) BUSINESS SEGMENT INFORMATION (UNAUDITED) (IN THOUSANDS OF CANADIAN DOLLARS) FOR THE YEAR ENDED AUGUST 31 ---------------------------- 2004 2003 2003 PROFORMA REVENUE (2) TELEVISION Canada 690,302 730,407 730,407 Australia - Network TEN 409,204 336,362 336,362 New Zealand - 3 and C4 108,236 95,055 95,055 Ireland - TV3 34,152 32,490 32,490 ---------- ---------- ---------- 1,241,894 1,194,314 1,194,314 RADIO - NEW ZEALAND 86,717 73,400 73,400 PUBLICATIONS AND ONLINE - CANADA 1,193,627 1,208,180 1,168,224 OUTDOOR - AUSTRALIA 43,742 36,656 36,656 ---------- ---------- ---------- TOTAL COMBINED REVENUE(1) 2,565,980 2,512,550 2,472,594 Elimination of equity accounted affiliates(3) (452,946) (373,018) (373,018) ---------- ---------- ---------- TOTAL CONSOLIDATED REVENUE 2,113,034 2,139,532 2,099,576 ========== ========== ========== OPERATING PROFIT TELEVISION Canada 147,430 216,346 216,346 Australia - Network TEN 145,328 106,975 106,975 New Zealand - 3 and C4 23,291 10,095 10,095 Ireland - TV3 10,591 9,729 9,729 ---------- ---------- ---------- 326,640 343,145 343,145 RADIO - NEW ZEALAND 27,488 20,751 20,751 PUBLICATIONS AND ONLINE - CANADA 267,343 258,496 248,391 OUTDOOR - AUSTRALIA 8,215 2,560 2,560 ---------- ---------- ---------- SEGMENT OPERATING PROFIT 629,686 624,952 614,847 Corporate expenses 27,110 23,213 23,213 Restructuring and film and television program impairment expenses 2,445 23,305 23,305 ---------- ---------- ---------- COMBINED OPERATING PROFIT (EBITDA)(1) 600,131 578,434 568,329 Elimination of equity accounted affiliates(3) (153,543) (99,219) (99,219) ---------- ---------- ---------- CONSOLIDATED OPERATING PROFIT (EBITDA) 446,588 479,215 469,110 ========== ========== ========== (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. 7 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 YEAR ENDED -------------------------- -------------------------- AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, 2004 2003 2004 2003 REVENUE 469,607 464,378 2,113,034 2,139,532 Operating expenses 277,409 280,043 1,124,543 1,115,849 Selling, general and administrative expenses 131,437 119,159 539,458 531,479 Restructuring expenses 2,445 (1,147) 2,445 12,989 -------------- ------------ ------------- ------------- 58,316 66,323 446,588 479,215 Amortization of intangibles 4,375 4,375 17,500 17,500 Amortization of property, plant and equipment 14,826 15,917 71,179 70,688 Other amortization 1,365 1,922 5,035 7,087 ------------- ----------- ------------- ------------- OPERATING INCOME 37,750 44,109 352,874 383,940 Interest expense (72,822) (84,464) (310,572) (352,966) Interest income 2,899 - 9,141 - Amortization of deferred financing costs (2,002) (1,062) (7,864) (8,247) Interest rate swap (losses) (100,660) (9,381) (110,860) (23,015) Foreign exchange gains 41,338 4,477 45,104 3,918 Investment gains and losses net of write-down 113,254 (10,591) 110,794 9,240 Dividend income - - 3,738 3,532 ------------- ----------- ------------- ------------- 19,757 (56,912) 92,355 16,402 Provision (recovery) for income taxes (22,971) (12,770) (10,181) 2,533 -------------- ------------ -------------- ------------- EARNINGS BEFORE THE FOLLOWING 42,728 (44,142) 102,536 13,869 Minority interest (478) - (478) - Interest in earnings of Network TEN 22,724 52,250 99,889 101,339 Interest in loss of other equity accounted affiliates (69) (297) (625) (1,332) Realized currency translation adjustments (5,138) 229 (7,023) 922 -------------- ----------- -------------- ------------- Net earnings from continuing operations 59,767 8,040 194,299 114,798 EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS 2,199 (52,752) (207,777) (68,710) -------------- ------------- -------------- -------------- Net earnings (loss) for the period 61,966 (44,712) (13,478) 46,088 ============== ============= ============== ============= EARNINGS PER SHARE FROM CONTINUING OPERATIONS: BASIC $0.34 $0.05 $1.10 $0.60 DILUTED $0.34 $0.05 $1.10 $0.60 EARNINGS (LOSS) PER SHARE: BASIC $0.35 ($0.25) ($0.08) $0.22 DILUTED $0.35 ($0.25) ($0.08) $0.22 8