(CANWEST GLOBAL LOGO)
NEWS RELEASE
For immediate release
April 6, 2006
CANWEST GLOBAL COMMUNICATIONS CORP. REPORTS FISCAL 2006 Q2 RESULTS
WINNIPEG - CanWest Global Communications Corp. today reported its financial
results for the second quarter and six months ended February 28, 2006. The
Company reported a consolidated net loss of $19 million or $0.11 per share for
the quarter compared to consolidated net earnings of $28 million or $0.16 per
share, for the second quarter of fiscal 2005.
The Company's consolidated revenues for the quarter decreased by 5% to $646
million compared to consolidated revenues of $680 million for the same period in
the prior year. Consolidated EBITDA(1) for the second quarter was $81 million
compared to consolidated EBITDA of $147 million for the same period in the prior
year. During the quarter, the Company determined that TV3 Ireland was not a core
asset and commenced the process to dispose of its 45% interest in TV3 Ireland.
Accordingly, results of TV3 Ireland for the current and comparable periods in
the prior year are excluded from consolidated revenue and consolidated EBITDA
and reported as results from discontinued operations, together with the results
of Fireworks Entertainment, the sale of which was completed in September, 2005.
Commenting on the results, Leonard Asper, CanWest's President and Chief
Executive Officer, said, "Operating results for the second quarter were
disappointing reflecting difficult conventional television advertising markets,
the negative impact of the strengthening Canadian dollar in respect of our
international operations and comparisons with the exceptionally strong results
reported by Network TEN last year. Compared to last year, results in Australia
and New Zealand were translated at exchange rates 9% below prior year's levels,
thus accounting for 3% of the 5% revenue decline in the quarter. In
Publications, we are beginning to see the impact of several cost containment
initiatives implemented in the quarter, which, after adjusting for severance
charges and start-up losses for Dose and Metro, led to year over year growth in
EBITDA. Earnings of our conventional TV businesses were negatively impacted in
the quarter by the Olympic Winter Games which distorted normal ratings and
advertising revenues in all television markets over a two week period in
February. In Canada, this forced a two-week delay in the launch of Global's key
programs, including The Apprentice and Prison Break. We are optimistic that the
steps taken to strengthen Global's schedule will lead to improved results in
future quarters. We are pleased to report that the Company's strengthened
capital structure resulted in financing costs declining 26% or $35 million for
the six months ended February 28, 2006."
Revenues at the Company's newspaper and interactive operations continued to
demonstrate strong performances with increases of 4% in the quarter. Second
quarter results for Canadian broadcasting operations reflect similar conditions
as in the first quarter in which EBITDA was impacted by investments made to
strengthen Global's programming schedule and the impact of weaker ratings in
fiscal 2005 on revenue. Ratings successes in the fall season for key programs
such as House, ET Canada and Prison Break are expected to contribute to stronger
revenues in the last half of the fiscal year. The National Post continues to
make improvements as operating losses declined by over 10% for the six months
ended February 28, 2006, based on revenue gains and stable costs.
There has been a slow down in the advertising market generally in Australia
following several consecutive years in which advertising market growth outpaced
GDP growth. The broadcast television landscape in Australia remains highly
competitive as individual audience shares for the three conventional television
networks are more tightly clustered today than they have been for a decade. In
this environment, TEN has gained audience share of 6% year-over-year for the
four week period ending March 11, 2006 in its target demographic of 16-39 year
olds and continues to hold the number one position in this key demographic. TEN
continued to strengthen its future programming schedule with the renewal earlier
this year of Australian Football League, and by securing a significant
programming agreement with FOX which commences in July 2007. While there has
been some softening in the New Zealand advertising market, again after a period
of significant growth, TVWorks continues to outpace the market due to its
increased audience ratings.
Eye Corp., the interactive operations, and the digital specialty channels all
continue to show good growth year-over-year. In the quarter, Eye Corp's revenues
on a local currency basis increased 12% with a slight increase in EBITDA. The
interactive operations posted revenue growth of 22% in the second quarter, while
showing modest EBITDA growth. The digital specialty services increased
subscribers to 5.6 million, an increase of 14% year-to-date. The digital
specialty channels delivered their second consecutive quarter of positive
contribution to EBITDA and we expect stronger contribution from these channels
going forward.
SIX MONTHS ENDED FEBRUARY 28, 2006
For the six month period, the Company recorded consolidated net earnings of $11
million or $0.06 per share, compared to consolidated net earnings of $64 million
or $0.36 per share for the first six months of 2005. Excluding the effects of
non-recurring charges related to the income trust IPO in the first quarter and
the early retirement of certain debt obligations and the settlement of interest
rate and cross currency swaps, earnings from continuing operations for the six
months ended February 28, 2006 would have been approximately $62 million or
$0.35 per share, compared to $119 million or $0.67 per share in the same period
last year.
For the six month period ended February 28, 2006, the Company recorded
consolidated revenues of $1,494 million, a decline of 3% compared to
consolidated revenues of $1,542 million for the six months of the prior year.
Consolidated EBITDA for the first six months of fiscal 2006 was $314 million
compared to $432 million for the same period last year.
Commenting on the outlook for the rest of the year, Leonard Asper, President and
Chief Executive Officer said "We expect varied financial results for the balance
of the year. Through continued strong revenue growth and an improving cost
structure, we expect year-over-year operating profit growth for our newspaper
and interactive operations. In Australia, the advertising market remains quite
short and we will continue to see a very competitive ratings environment. TEN is
well positioned in the second half of the year as it will be launching the
strongest part of its schedule, featuring programs such as Australian Football
League, Big Brother and Australian Idol. In local currency terms, we expect our
New Zealand operations to continue to demonstrate stable performance. We do not
expect any material change to Global's financial outlook in the second half of
the year. A number of initiatives implemented this quarter, including the Global
brand re-positioning, the move of Global National News to 5:30 pm across Canada,
the strengthening of the Global schedule with program additions, Las Vegas, 24,
My Name is Earl, The Office, Conviction, and the streamlining of back-office
television operations, will support a strengthening financial position in fiscal
2007."
HIGHLIGHTS OF THE SECOND QUARTER INCLUDE THE FOLLOWING:
- CanWest's distributions from the CanWest MediaWorks Income Fund
totaled $40 million for the second quarter and $59 million for the
six months ended February 28, 2006.
- On April 3, CanWest MediaWorks New Zealand declared an interim
dividend of NZ$0.045 per share to be paid in May, representing an
increase of 12.5% over the interim dividend paid last year. CanWest
will receive aggregate dividends of NZ$7.1 million.
- The divestiture of CanWest's 45% interest in TV3 Ireland is
proceeding smoothly with a number of qualified strategic and
financial buyers. TV3 Ireland continues to post strong financial
performance with revenue and EBITDA increases in the quarter of 14%
and 48% respectively, in local currency terms.
- CanWest MediaWorks New Zealand expanded its radio presence with the
acquisitions of Orewa-based Times FM, which covers the North
Auckland region, and Q92FM serving the fast growing areas of
Queenstown, the Wakatipu Basin and Central Otago.
- CanWest and its Turkish partners announced the successful bid for
two radio stations, Joy FM and Joy Turk FM, serving Istanbul,
Turkey's largest city (population - 11.3 million). These
acquisitions along with those previously announced are expected to
close in the third quarter of the fiscal year.
- After four weeks on the air in its new 5:30 pm time slot across
Canada, Global National averaged one million daily viewers, making
it the number one national newscast in the country (source: BBM
audiences 2 plus, Monday-Friday).
- The Australian Minister of Communications released a discussion
paper on reform options for Australia's media industry on March 14.
CanWest welcomes the proposed removal of current restrictions on
cross-media ownership and foreign investment in the media sector. We
are also pleased that the government will not consider licensing a
fourth commercial free-to-air television network until at least
2010.
- Dose continues to show strong readership growth boosting its total
readership from 240,000 to 292,000 daily readers according to a
recent study conducted by Ipsos-Reid.
- CanWest's national spelling bee, CanSpell, expanded nationally with
the addition of spelling bees in Newfoundland, Prince Edward Island
and Nova Scotia. More than 1,200 schools registered and more than
160,000 students participated in the school level competitions, an
increase of almost 100% over the previous year.
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 also
owns, operates and/or holds substantial interests in Canada's largest publisher
of daily newspapers, and conventional television, out-of-home advertising,
specialty cable channels, web sites and radio stations and networks in Canada,
New Zealand, Australia, Ireland and the United Kingdom.
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)
<Table>
<Caption>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED FEBRUARY 28, ENDED FEBRUARY 28,
------------------ ------------------
2006 2005 2006 2005
REVENUE
Publications and Interactive - Canada 301,096 289,467 642,394 615,226
-------- -------- ---------- ----------
Television
Canada 153,829 163,718 340,904 363,999
Australia - Network TEN 120,282 154,573 350,978 401,424
New Zealand - 3 and C4 22,638 23,104 58,738 58,855
-------- -------- ---------- ----------
296,749 341,395 750,620 824,278
Radio - New Zealand 22,305 24,412 45,877 48,175
Outdoor - Australia 25,465 24,918 55,139 53,822
-------- -------- ---------- ----------
CONSOLIDATED REVENUE 645,615 680,192 1,494,030 1,541,501
======== ======== ========== ==========
SEGMENT OPERATING PROFIT
Publications and Interactive - Canada 47,511 55,211 129,135 140,862
-------- -------- ---------- ----------
Television
Canada (519) 25,671 28,451 81,163
Australia - Network TEN 32,607 58,773 137,097 178,965
New Zealand - 3 and C4 1,586 1,967 13,861 16,496
-------- -------- ---------- ----------
33,674 86,411 179,409 276,624
Radio - New Zealand 6,733 7,957 13,751 15,695
Outdoor - Australia 4,696 4,904 12,165 12,697
-------- -------- ---------- ----------
92,614 154,483 334,460 445,878
Corporate and other (11,699) (7,620) (20,356) (13,770)
Ravelston management contract termination -- (281) -- (562)
-------- -------- ---------- ----------
OPERATING PROFIT (EBITDA)(1) 80,915 146,582 314,104 431,546
======== ======== ========== ==========
</Table>
(1) EBITDA is defined as earnings before interest, income taxes, depreciation,
amortization, interest rate and foreign currency swap losses, foreign
exchange gains (losses), investment gains, losses and write-downs, loss on
debt extinguishment, minority interests, interest in earnings (loss) of
equity accounted affiliates, realized currency translation adjustments and
earnings 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.
CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS EXCEPT AS OTHERWISE NOTED)
<Table>
<Caption>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------- ------------------------
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
2006 2005 2006 2005
Revenue 645,615 680,192 1,494,030 1,541,501
Operating expenses 381,342 363,845 809,820 769,786
Selling, general and administrative
expenses 183,358 169,484 370,106 339,607
Ravelston management contract termination -- 281 -- 562
-------- -------- ---------- ----------
80,915 146,582 314,104 431,546
Amortization of intangibles 4,887 4,958 10,462 9,897
Amortization of property, plant and
equipment 24,378 23,103 47,915 44,593
Other amortization 1,358 1,318 2,832 2,482
-------- -------- ---------- ----------
Operating income 50,292 117,203 252,895 374,574
Interest expense (46,327) (61,046) (98,839) (133,776)
Interest income 737 839 1,252 1,485
Amortization of deferred financing costs (1,481) (3,120) (3,430) (5,321)
Interest rate and foreign currency swap
losses (7,160) (4,902) (127,699) (49,500)
Foreign exchange gains (losses) 149 (3,759) (425) 6,737
Investment gains, losses and write-downs 1,839 (1,689) 103,057 (54)
Loss on debt extinguishment (291) -- (116,880) (43,992)
-------- -------- ---------- ----------
(2,242) 43,526 9,931 150,153
Provision for (recovery of) income taxes (109) (1,351) (54,987) 35,231
-------- -------- ---------- ----------
Earnings (loss) before the following (2,133) 44,877 64,918 114,922
Minority interests (16,729) (17,968) (60,444) (56,375)
Interest in earnings (loss) of equity
accounted affiliates (3) 596 827 1,047
Realized currency translation adjustments (1,664) (848) (1,780) (848)
-------- -------- ---------- ----------
NET EARNINGS (LOSS) FROM CONTINUING
OPERATIONS (20,529) 26,657 3,521 58,746
Earnings from discontinued operations 1,232 1,539 7,132 4,865
-------- -------- ---------- ----------
NET EARNINGS (LOSS) FOR THE PERIOD (19,297) 28,196 10,653 63,611
======== ======== ========== ==========
EARNINGS (LOSS) PER SHARE FROM CONTINUING
OPERATIONS (IN DOLLARS):
BASIC ($0.12) $0.15 $0.02 $0.33
DILUTED ($0.12) $0.15 $0.02 $0.33
EARNINGS (LOSS) PER SHARE (IN DOLLARS):
BASIC ($0.11) $0.16 $0.06 $0.36
DILUTED ($0.11) $0.16 $0.06 $0.36
</Table>