[CANWEST GLOBAL COMMUNICATIONS CORP. LOGO]
NEWS RELEASE
For immediate release
July 13, 2005
CANWEST REPORTS 12% INCREASE IN Q3 NET EARNINGS FROM CONTINUING OPERATIONS
Consolidated Q3 revenues increase 3%
WINNIPEG -- CanWest Global Communications Corp. today reported its financial
results for the three months ended May 31, 2005, the third quarter of its 2005
fiscal year. The Company reported consolidated net earnings of $53 million or
$0.30 per share for the quarter. This result was comparable to the consolidated
net earnings for the same period in 2004 of $54 million or $0.31 per share.
Earnings from continuing operations at $59 million or $0.33 per share were up
12% from earnings from continuing operations of $52 million or $0.30 per share
reported for the same period last year. Losses from discontinued operations
track to Fireworks Entertainment, the sale of which is expected to close before
the end of July.
Consolidated revenues for the three month period ended May 31, 2005 increased by
3% to $810 million compared to consolidated revenues of $784 million for the
same period in 2004. Consolidated earnings before interest, taxes, depreciation
and amortization (EBITDA)(1) for the quarter were $198 million, compared to
consolidated EBITDA of $202 million for the same period in 2004.
Revenues for the quarter from Canadian Publishing and Online operations
increased by 4% to $323 million compared to $311 million for the third quarter
of 2004. Publishing and Online EBITDA was $75 million compared to $74 million
last year. Publishing and online EBITDA was up approximately 5% in the quarter
when losses associated with new businesses under development are excluded,
notably the new free-sheet magazine DOSE, distributed in five Canadian cities,
and CanWest's joint venture with Torstar and Metro SA under which CanWest has a
one-third financial interest in METRO free-sheet newspapers in Vancouver and
Ottawa.
The Company's South Pacific television operations continued to register strong
results for the quarter. TEN Television Network recorded a 3% gain in revenues
to $194 million compared to $189 million for the same quarter one year ago.
EBITDA declined 5% to $53 million due primarily to increased expenditures on
programming that successfully preserved TEN's ratings in a highly competitive
Australian television market. A higher exchange rate for the Canadian dollar
relative to Australian currency also contributed to the EBITDA decline. In
domestic currency terms, TEN's EBITDA was flat to last year. TEN maintained its
ratings lead in its target 16-39 demographic and in the most recent ratings
week, ended July 9th, scored 7 of the top ten shows and 12 of the top 20 among
viewers in its young adult target audience. Network TEN expects a strong finish
to the Australian television season as several hit programs such as BIG BROTHER
are just now starting to make an impact on the ratings. In the week ended June
25 BIG
BROTHER programs alone accounted for six of the top 20 programs in Australia in
the 16-39 demographic.
Eye Corp., TEN's out-of-home advertising business, maintained its strong revenue
and EBITDA growth momentum with a 38% increase in revenues to $27 million and a
43% increase in EBITDA to over $5 million for the third quarter ended May 31,
2005.
CanWest MediaWorks (NZ) Limited also experienced a strong third quarter. New
Zealand television, TVWorks, recorded a 16% increase in revenues for the quarter
to $31 million and 27% growth in EBITDA to $6 million. Strong ratings for new
current affairs and news programs, CAMPBELL LIVE, and 3 NEWS contributed
significantly to the improvement. CanWest's New Zealand radio operations,
RadioWorks' registered an 11% increase in revenues to $23 million for the third
quarter. RadioWorks EBITDA of $5 million for the quarter decreased from $6
million recorded in the same quarter last year, as a result of costs associated
with the re-branding of certain of its stations and investment in new
programming.
CanWest's 45% interest in TV3 Ireland's generated EBITDA of $4 million for the
quarter, a 43% increase from the prior year on revenue growth of 10% to over $10
million.
Revenue at Canadian broadcasting operations declined by 3% to $201 million from
$207 million for the same quarter last year. EBITDA of $57 million for the
quarter was 7% below the $61 million result for the third quarter of 2004.
Compared to previous years, weaker ratings performance in difficult market
conditions, contributed to the decline in revenues and EBITDA at Global.
The Company has increased significantly its investment in new programming and is
optimistic about the prospects for improved ratings in the next fiscal year. New
programs that the Global and CH networks have secured for the fall season
include highly anticipated new dramas PRISON BREAK and E-RING, starring Benjamin
Bratt and Dennis Hopper; HEAD CASES starring Chris O'Donnell and the ensemble
dramas REUNION and SEX, LIES AND SECRETS. In addition Global has added new
half-hour comedies including MY NAME IS EARL and OUT OF PRACTICE. Global and CH
are also adding new Canadian shows to their line-ups including FALCON BEACH,
HOUSE & HOME WITH LYNDA REEVES and REGENESIS among others.
Commenting on the third quarter results, Leonard Asper, CanWest's President and
Chief Executive Officer, said, "The increase in net earnings from continuing
operations was largely attributable to reduced interest expense arising from the
Company's successful debt reduction program as well as good results from our
operations in Australia and New Zealand. Costs associated with the start-up of
our new free-sheet publications, DOSE and METRO masked financial gains at our
existing newspaper operations. All media operations recorded significant revenue
increases except Canadian broadcasting, where conventional television continues
to struggle. The Company will continue to invest in a strong lineup of new
American and Canadian series and in expanded marketing and promotion to restore
Global's ratings and to strengthen the brands of our television and newspaper
operations."
NINE MONTHS ENDED MAY 31, 2005
For the nine month period ended May 31, 2005, the Company recorded consolidated
revenues of $2,371 million, an increase of 6% compared to consolidated revenues
of $2,246 million for the first nine months of the prior year. Consolidated
EBITDA for the first nine months of fiscal
2005 was $636 million, 7% higher than consolidated EBITDA of $596 million for
the first nine months of fiscal 2004.
The Company recorded consolidated net earnings for the nine-month period of $116
million or $0.66 per share compared to a loss of $75 million or $0.43 per share
for the same period last year.
Excluding all charges related to Fireworks, earnings from continuing operations
for the first nine months of 2005 were $123 million or $0.69 per share compared
to $135 million or $0.76 per share for the first nine months of fiscal 2004.
Earnings this year have been affected by charges related to debt retirement,
including swap losses, foreign exchange gains, and the $44 million loss on
extinguishment of subordinated debentures (the Hollinger "PIK" notes). The total
effect of these charges, net of income taxes, was $68 million for the first nine
months of 2005 compared to $2 million for the same period in 2004. Excluding the
effects of these charges, earnings from continuing operations for the first nine
months of 2005 would have been $190 million, compared to $137 million for the
same period in 2004.
HIGHLIGHTS OF THE THIRD QUARTER
- In March, the Company appointed David Drybrough, F.C.A, a native of
Winnipeg, as Interim Chair of its Board of Directors. Mr. Drybrough
replaced the Hon. Frank McKenna, who had resigned as Chair to become
Canada's Ambassador to the United States of America. In April, the Company
appointed two new independent directors to its Board - Mr. Derek H.
Burney, OC, of Ottawa and Ms. Lisa Pankratz, CA, CFA, of Vancouver.
- Also in March, the Company entered into a joint venture with Torstar
Corporation and Metro International S.A. to publish English-language free
daily newspapers in various Canadian cities. Each partner has a 33.3%
financial interest in the new venture, which commenced with the launch of
METRO VANCOUVER on March 14 followed shortly after by METRO OTTAWA, Metro
newspapers are distributed free of charge through boxes situated in
high-traffic locations including transit stops, university campuses and
highly populated business districts.
- In April 2005, the Company launched, DOSE, a revolutionary multi-media
brand aimed at young Canadians. DOSE includes Canada's first free daily
magazine, with 320,000 copies distributed every weekday in Calgary,
Edmonton, Ottawa, Toronto and Vancouver.
- Also in April, CanWest Entertainment International Distribution reached
agreement on the sale of its international film and television program
receivables. This transaction is expected to close in July.
- In June, the Company appointed Peter Viner, a long-time CanWest executive,
as President and Chief Executive Officer of CanWest MediaWorks, its
Canadian media operations.
- Also in June, a Federal Court in New York issued a preliminary injunction
in favour of CanWest that will prevent the sale, merger, acquisition and
similar transactions involving the Palestine Post Limited, Jerusalem Post
Publications Limited, and associated publications, in order to preserve
the status quo pending completion of arbitration
commenced by CanWest relating to ownership of the JERUSALEM POST and
related properties.
- On June 21, Network TEN declared its semi-annual dividend that will result
in dividend and interest distributions of A$47.6 million to be paid to
CanWest in July.
In a news release in June the Company responded to speculation among analysts
and in the media regarding a possible decision by the Company to spin some or
all of its Canadian media assets into an income trust structure. That
possibility remains under close and active consideration and the Company expects
to take such a decision this fall. In the meantime the Company remains focused
upon strengthening its balance sheet and creating value for our shareholders.
This news 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 Company's website:
www.canwestglobal.com.
CanWest Global Communications Corp. (NYSE: CWG; TSX: CGS.SV and CGS.NV,
www.CanWestglobal.com), an international media company, is 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.
For further information contact:
Geoffrey Elliot 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
CANWEST GLOBAL COMMUNICATIONS CORP.
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------- -------------------------
MAY 31, MAY 31,
------- -------
2005 2004 2005 2004
REVENUE
Publications and online - Canada 323,383 311,419 938,609 912,822
---------- ------------ ------------ -----------
Television
Canada 200,696 207,483 564,695 559,712
Australia - Network TEN 194,452 188,766 595,876 545,832
New Zealand - 3 and C4 30,948 26,610 89,803 78,554
Ireland - TV3 10,386 9,423 30,168 27,042
---------- ------------ ------------ -----------
436,482 432,282 1,280,542 1,211,140
Radio - New Zealand 23,054 20,833 71,229 65,299
Outdoor - Australia 26,803 19,407 80,625 57,149
---------- ------------ ------------ -----------
CONSOLIDATED REVENUE 809,722 783,941 2,371,005 2,246,410
========== ============ ============ ===========
OPERATING PROFIT
Publications and online - Canada 74,956 74,269 215,256 213,995
---------- ------------ ------------ -----------
Television
Canada 56,849 61,322 138,012 147,450
Australia - Network TEN 52,929 55,491 231,894 197,628
New Zealand - 3 and C4 6,023 4,748 22,819 17,661
Ireland - TV3 4,288 2,993 11,542 8,879
---------- ------------ ------------ -----------
120,089 124,554 404,267 371,618
Radio - New Zealand 5,120 5,927 21,115 20,944
Outdoor - Australia 5,327 3,737 18,024 10,361
Corporate and other (7,878) (6,120) (22,747) (20,657)
---------- ------------ ------------ -----------
TOTAL SEGMENT OPERATING PROFIT
(EBITDA)(1) 197,614 202,367 635,915 596,261
========== ============ ============ ===========
(1) EBITDA is defined as earnings before interest, income taxes, depreciation,
amortization, interest rate and foreign currency swap gains (losses), foreign
exchange gains (losses), investment gains, losses and write-downs, loss on debt
extinguishment, dividend income, minority interests, interest in earnings (loss)
of equity accounted affiliates, realized currency translation adjustments and
earnings (loss) from discontinued operations. This supplementary earnings
measure does not have a standardized meaning prescribed by Canadian generally
accepted accounting principles and may not be comparable to similar measures
presented by other companies nor should it be viewed as an alternative to net
earnings. The reconciliation of EBITDA to net earnings is evident on the face of
the following consolidated statements of earnings (loss).
CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(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,
2005 2004 2005 2004
Revenue 809,722 783,941 2,371,005 2,246,410
Operating expenses 428,302 413,285 1,206,468 1,157,490
Selling, general and administrative expenses
183,806 168,289 528,622 492,659
----------- ------------- ------------ ------------
197,614 202,367 635,915 596,261
Amortization of intangibles 4,988 4,552 14,885 13,640
Amortization of property, plant and equipment 23,623 24,088 68,628 69,786
Other amortization 1,291 1,281 3,788 3,670
----------- ------------- ------------ ------------
Operating income 167,712 172,446 548,614 509,165
Interest expense (59,003) (85,341) (193,337) (258,843)
Interest income 725 291 2,210 6,242
Amortization of deferred financing costs (3,093) (2,043) (8,414) (6,060)
Interest rate and foreign currency swap gains
(losses) (12,584) 7,004 (79,790) (9,099)
Foreign exchange gains (losses) 4,263 (1,360) 28,706 3,766
Investment gains, losses and write-downs 285 354 231 (2,460)
Loss on debt extinguishment - - (43,992) -
Dividend income - 2,323 - 3,738
------------ ------------- ------------ ------------
98,305 93,674 254,228 246,449
Provision for income taxes 18,127 19,290 54,186 47,186
------------ ------------- ------------ ------------
Earnings before the following 80,178 74,384 200,042 199,263
Minority interests (22,251) (16,691) (78,626) (62,290)
Interest in earnings (loss) of equity accounted
affiliates 504 (207) 1,551 (556)
Realized currency translation adjustments 392 (5,011) (456) (1,885)
------------ -------------- ------------- -------------
NET EARNINGS FROM CONTINUING OPERATIONS 58,823 52,475 122,511 134,532
Earnings (loss) from discontinued operations (6,105) 1,862 (6,182) (209,976)
------------ ------------- ------------- --------------
NET EARNINGS (LOSS) FOR THE PERIOD 52,718 54,337 116,329 (75,444)
=========== ============= ============ ============
EARNINGS PER SHARE FROM CONTINUING OPERATIONS:
BASIC $0.33 $0.30 $0.69 $0.76
DILUTED $0.33 $0.30 $0.69 $0.76
EARNINGS (LOSS) PER SHARE:
BASIC $0.30 $0.31 $0.66 ($0.43)
DILUTED $0.30 $0.31 $0.65 ($0.43)