(CANWEST GLOBAL COMMUNICATIONS CORP. LOGO)
NEWS RELEASE
For Immediate Release
November 2, 2006
CANWEST'S NET EARNINGS INCREASE IN F2006
WINNIPEG -- CanWest Global Communications Corp. today reported financial results
for its fourth quarter and for its fiscal year ended August 31, 2006. For the
twelve-month period, the Company reported net earnings of $179 million or $1.01
per share, compared to $10 million or $0.06 per share reported for fiscal 2005.
Net earnings in fiscal 2006 included a $164 million gain on the sale of TV3
Ireland in the fourth quarter.
Consolidated revenues were $2,879 million for the year, a decline of 5% compared
to consolidated revenues of $3,032 million for fiscal 2005. Consolidated
EBITDA(1) for fiscal 2006 was $509 million, a 28% decline from consolidated
EBITDA of $710 million for fiscal 2005.
The Company recorded net earnings of $155 million for the fourth quarter ended
August 31, 2006 compared to a net loss of $106 million for the same period in
2005.
Consolidated revenues for the three-month period ended August 31, 2006 were $655
million, a decline of 6% from $694 million for the quarter one year ago.
Consolidated EBITDA for the quarter was $78 million, compared to consolidated
EBITDA of $84 million for the same period in 2005.
Commenting on the results, Leonard Asper, CanWest's President and Chief
Executive Officer, said, "All our major operations faced difficult advertising
markets over the past year with adverse currency translation contributing
further to declines in results from the South Pacific. Markets now appear to be
stabilizing and we expect a firming of revenues and EBITDA in the new fiscal
year. Our publications group posted a substantial increase in EBITDA in the
fourth quarter as the impact of actions taken earlier in the year to reduce
costs began to take hold. A strong start in the Fall ratings is tracking to
improving revenues at our Canadian television operations and should be reflected
in EBITDA growth for the first quarter. Other notable developments during the
year include the successful IPO of our publications group, which contributed
substantially to the financial strength and flexibility of the Company, the sale
of our interest in TV3 Ireland and our international growth in radio with two
new radio licences in the UK and the acquisition of four established stations in
Turkey. The international expansion of Eye Corp, with major deals concluded in
Singapore, the UK and most recently in the US, was also a notable achievement."
SEGMENTED RESULTS FOR FISCAL 2006
Revenues for the Company's publications and interactive operations for the year
were $1,258 million, 2% higher than revenues of $1,229 million for the same
period in fiscal 2005. Publications and interactive EBITDA of $248 million for
the year was down 3% from $255 million in fiscal 2005. The EBITDA decline was
primarily attributable to start up losses associated with the free commuter
daily magazine Dose and CanWest's share of losses of the Metro joint venture. In
June, the Company converted the print version of Dose to an on-line version
only. Severance costs related
to this and other restructuring initiatives in fiscal 2006 amounted to $11
million. A significant rebound in national advertising and growth in online
classified products was offset by weakness in the automotive sector and in
newspaper classified advertising. The CanWest MediaWorks Limited Partnership
declared distributions which resulted in an amount payable to CanWest of $133
million for the period from October 13, 2005 to August 31, 2006.
Network TEN's $197 million contribution to CanWest's consolidated EBITDA,
represented a decline of 33% from $294 million for fiscal 2005, primarily due to
a slowdown in the television advertising market that affected all broadcasters
in Australia. An 8% decline in the rate of currency translation of Australian
results to Canadian currency was also a significant factor. Network TEN
continued to post strong ratings performance, again leading in its target 16-39
young adult demographic while also winning the number one position in the wider
18-49 demographic. There were indications that the television ad market had
stabilized by the end of the fiscal year and we expect an improving trend in
revenues in fiscal 2007.
Weak advertising markets and currency translation also affected Eye Corp, TEN's
wholly-owned out-of-home advertising business. Revenues for the year grew by 1%
to $109 million while EBITDA declined by 15% to $20 million. Eye Corp invested
significantly in international expansion during the year and landed major
airport advertising deals for the Changi International Airport in Singapore and
the three airports of the Manchester Airports Group (MAG) in the UK. Following
the end of the year Eye Corp announced a major expansion into the US through the
acquisition of a US shopping mall advertising company that will bring Eye Shop
to over 200 shopping malls throughout the US.
CanWest MediaWorks (NZ) Limited faced similar advertising market and currency
translation challenges in the second half of fiscal 2006. In local currency
terms the Company's New Zealand operations recorded a 2% revenue gain for the
year and flat EBITDA as compared to the prior year's result. However when
translated into Canadian currency consolidated revenues declined by 11% to $193
million, while EBITDA was 12% lower at $50 million compared to the previous
fiscal year. Revenues at TVWorks were down 11% to $109 million, with EBITDA
declining by 14% to $26 million for the year. A solid line-up of locally
produced series, international hit programs and substantial growth in audiences
for its re-launched evening news program 3News, increased 3's audience share in
its target 18-49 year old demographic as well as in the older 24-54 demographic.
RadioWorks' recorded a 10% revenue decline for the year to $84 million, while
EBITDA of $24 million at RadioWorks was 9% below the result for the prior year.
Based upon these results, CanWest MediaWorks NZ declared a final 2006 dividend
of NZ 3.9 cents per share payable in November, which will result in aggregate
dividends of NZ$13 million to be received by CanWest in respect of fiscal 2006.
Canadian television operations experienced a 6% decline in revenues for fiscal
2006 to $656 million from $696 million in fiscal 2005. EBITDA of $31 million for
the year was 75% below the result for the prior year due to substantially higher
costs associated with ratings-driven investment in Canadian and international
programming during a weak revenue environment. That investment was beginning to
pay off at the end of the year with increases in airtime revenue in the fourth
quarter and indications of continuing gains as we move into fiscal 2007. Global
had several programs in the top ten in the major Toronto and Vancouver markets
including the Survivor-Cook Island, House, Prison Break, and Rock Star. Global's
ET Canada, solidified its hold on the number one position among Canadian
entertainment magazine programs. Global National also became the number one
national news program in 2006. Canadian broadcast operations incurred charges of
$11 million for the year as a result of restructuring initiatives and associated
severance costs.
HIGHLIGHTS OF THE FOURTH QUARTER AND THE ENSUING PERIOD
- In August 2006 the Company completed the sale of its interest in TV3
Ireland. Net proceeds from the sale, of approximately $179 million,
were used to pay down debt in September. CanWest recorded a gain of
$164 million on the sale of its Irish assets.
- Also in August, the Company announced the appointment of Mr. Derek H.
Burney, O.C., of Ottawa, as Chairman of the Board of Directors. Mr.
Burney joined the Board in April, 2005 and took over from Interim
Chairman David Drybrough, Mr. Drybrough will remain on the Board and
continue to serve as Chair of the Audit Committee.
- In September 2006, CanWest was awarded a second commercial radio
station licence in the UK, to be located in Bristol, Britain's eighth
largest city. This new radio licence follows the earlier radio licence
awarded to CanWest in September 2005 for an FM radio station serving
the Solent region on the South coast of England. Original 106 went
on-air on October 1, 2006 from a new studio complex in Southampton,
England. No date has yet been announced for the launch of the new
station in Bristol that will also be branded Original 106.
- In October, 2006 the Company entered into an agreement for the sale of
its two Canadian radio stations, 99.1 Cool FM in Winnipeg and 91.5 The
Beat FM located in Kitchener Ontario to Corus Entertainment. Net
proceeds of approximately $15 million will also be applied to debt
reduction. Completion of the transaction is subject to regulatory
approval by the CRTC.
- In October, 2006, both Houses of the Australian parliament passed
legislation that will remove foreign ownership restrictions and relax
cross-media ownership rules affecting the media industry in that
country. CanWest has retained Citigroup Global Markets Inc., to
explore opportunities for the Company in that evolving environment.
- The 2006 Raise A Reader campaign completed its most successful
campaign yet in September, raising $2.2 million to support literacy
programs in cities across Canada, an increase of 18% over 2005 thanks
to the hard work and generosity of 3,500 volunteers and national and
local sponsors. Raise A Reader has raised $7.5 million since the first
national campaign in 2002. Most importantly we delivered a very
powerful message on behalf of all Canadians on the importance of
improving our literacy levels.
- Global TV became a leader in on-line distribution, being the first
Canadian broadcaster to negotiate streaming rights to U.S. programs
including major hits such as Survivor, Deal or No Deal, and 1 vs.100.
In addition, Global National is now available daily through video
podcasts and bbTV. bbTV, launched in partnership with Rogers Wireless,
is the world's first video player for BlackBerry devices.
OUTLOOK:
As we move into fiscal 2007 we anticipate a gradual improvement in overall
operating results. Our operations in the South Pacific are well-positioned to
benefit from stabilizing and firming of advertising markets in Australia and New
Zealand. The positive earnings trend of the publications operations should
continue in fiscal 2007 as actions already taken to contain and reduce costs
take hold and continue. There are also signs that we have turned a corner at our
Canadian television operations with significantly improved ratings and
resumption of revenue growth. In addition, continued progress in reducing debt
in 2006 has significantly reduced annual interest expense, while augmenting the
financial strength and flexibility of the Company to pursue strategic
opportunities. New media opportunities continue to prove profitable as
canada.com, FPInfomart, our websites and mobile content distribution strategies
are met with approval from our consumers and advertisers.
FORWARD LOOKING STATEMENTS:
This news release contains certain comments or forward-looking statements about
the objectives, strategies, financial conditions, results of operations and
businesses of CanWest. Statements that are not historical facts are
forward-looking and are subject to important risks, uncertainties and
assumptions. These statements are based on our current expectations about our
business and the markets in which we operate, and upon various estimates and
assumptions. The results or events predicted in these forward-looking statements
may differ materially from actual results or events if known or unknown risks,
trends or uncertainties affect our business, or if our estimates or assumptions
turn out to be inaccurate. As a result, there is no assurance that the
circumstances described in any forward-looking statement will materialize.
Significant and reasonably foreseeable factors that could cause our results to
differ materially from our current expectations are discussed in the section
entitled "Risk Factors" contained in our Annual Information Form for the year
ended August 31, 2005 dated November 28, 2005 filed by CanWest Global
Communications Corp. with the Canadian securities commissions (available on
SEDAR at www.sedar.com ) and with the U.S. Securities and Exchange Commission
under Form 40-F (available on EDGAR at www.sec.gov), as updated in our most
recent Management's Discussion and Analysis for the three months and twelve
months ended August 31, 2006, dated November 2, 2006. We disclaim any intention
or obligation to update any forward-looking statement even if new information
becomes available, as a result of future events or for any other reason.
The Company's financial statements are available on the Company's website:
www.canwestglobal.com.
The Company will hold its regular quarterly conference call with analysts on
November 2, 2006 at 5:00 p.m. Eastern Standard Time. The call-in numbers are
416-644-3418 or 866-250-4877. Replays are also available for five days following
the call at 416-640-1917 or 877-289-8525 using the pass-code 21205353#.
CanWest Global Communications Corp. (www.canwestglobal.com), (TSX: CGS and
CGS.A, NYSE: CWG) 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, Turkey, Singapore, Indonesia, Malaysia, the United
Kingdom and the United States.
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 TWELVE MONTHS ENDED
AUGUST 31, AUGUST 31,
-------------------------- ---------------------------
2006 2005 2006 2005
------- ------- --------- ---------
REVENUE
Publications and Interactive - Canada 293,211 290,242 1,258,455 1,228,851
------- ------- --------- ---------
Television
Canada 129,444 133,340 656,275 696,106
Australia - Network TEN 156,580 187,439 656,306 783,315
New Zealand - 3 and C4 25,432 33,192 108,886 122,995
------- ------- --------- ---------
311,456 353,971 1,421,467 1,602,416
------- ------- --------- ---------
Radio
New Zealand - RadioWorks 19,345 22,199 83,926 93,428
Turkey 3,480 -- 5,726 --
------- ------- --------- ---------
22,825 22,199 89,652 93,428
------- ------- --------- ---------
Outdoor - Australia 27,693 27,165 109,051 107,790
------- ------- --------- ---------
CONSOLIDATED REVENUE 655,185 693,577 2,878,625 3,032,485
======= ======= ========= =========
SEGMENT OPERATING PROFIT
Publications and Interactive - Canada 52,877 38,869 248,429 254,875
------- ------- --------- ---------
Television
Canada (22,049) (12,545) 31,487 126,425
Australia - Network TEN 38,662 61,634 197,229 293,528
New Zealand - 3 and C4 7,100 7,746 25,939 30,110
------- ------- --------- ---------
23,713 56,835 254,655 450,063
------- ------- --------- ---------
Radio
New Zealand - RadioWorks 5,644 5,732 23,990 26,392
Turkey 1,234 -- 2,610 --
------- ------- --------- ---------
6,878 5,732 26,600 26,392
------- ------- --------- ---------
Outdoor - Australia 3,935 5,149 19,593 23,173
------- ------- --------- ---------
87,403 106,585 549,277 754,503
Corporate and other (9,528) (11,078) (39,928) (32,065)
Ravelston management contract
termination -- (12,000) -- (12,750)
------- ------- --------- ---------
OPERATING PROFIT (EBITDA) (1) 77,875 83,507 509,349 709,688
======= ======= ========= =========
(1) EBITDA is defined as earnings before interest, income taxes, depreciation,
amortization, interest rate and foreign currency swap losses, foreign
exchange gains, investment gains, losses and write-downs, goodwill
impairment expense, asset impairment expense, loss on debt extinguishment,
dividend income, minority interests, interest in earnings 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 TWELVE MONTHS ENDED
-------------------------- ---------------------------
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
2006 2005 2006 2005
---------- ---------- ---------- -----------
Revenue 655,185 693,577 2,878,625 3,032,485
Operating expenses 379,808 385,331 1,551,852 1,532,939
Selling, general and administrative expenses 197,502 212,739 817,424 777,108
Ravelston management contract termination -- 12,000 -- 12,750
-------- -------- --------- ----------
77,875 83,507 509,349 709,688
Amortization of intangibles 1,285 5,456 12,423 20,341
Amortization of property, plant and equipment 21,762 22,985 94,171 90,943
Other amortization 1,275 1,484 7,383 5,197
-------- -------- --------- ----------
Operating income 53,553 53,582 395,372 593,207
Interest expense (49,270) (58,549) (194,216) (251,120)
Interest income 908 489 2,510 2,766
Amortization of deferred financing costs (1,540) (4,294) (6,494) (12,708)
Interest rate and foreign currency swap losses (6,194) (64,034) (138,639) (121,064)
Foreign exchange gains (losses) 4,526 2,637 (7,941) 8,583
Investment gains, losses and write-downs (769) 1,296 102,490 1,527
Goodwill impairment expense -- (41,406) -- (41,406)
Asset impairment expense -- (9,629) -- (9,629)
Loss on debt extinguishment (521) -- (117,401) (43,992)
-------- -------- --------- ----------
693 (119,908) 35,681 126,164
Provision for (recovery of) income taxes (16,192) (33,062) (76,022) 20,226
-------- -------- --------- ----------
Earnings before the following 16,885 (86,846) 111,703 105,938
Minority interests (23,089) (17,971) (102,067) (96,597)
Interest in earnings of equity accounted affiliates 1,219 492 2,612 2,043
Realized currency translation adjustments (4,086) 1,078 (6,883) 622
-------- -------- --------- ----------
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS (9,071) (103,247) 5,365 12,006
Gain on sale of discontinued operations 163,547 -- 163,547 --
Earnings (loss) from discontinued operations 389 (2,813) 9,760 (1,801)
-------- -------- --------- ----------
NET EARNINGS (LOSS) FOR THE PERIOD 154,865 (106,060) 178,672 10,205
======== ======== ========= ==========
EARNINGS (LOSS) PER SHARE FROM CONTINUING
OPERATIONS:
BASIC ($0.05) ($0.58) $ 0.03 $ 0.07
DILUTED ($0.05) ($0.58) $ 0.03 $ 0.07
EARNINGS (LOSS) PER SHARE:
BASIC $ 0.87 ($0.60) $ 1.01 $ 0.06
DILUTED $ 0.87 ($0.60) $ 1.01 $ 0.06