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Radio results lead CHUM; VI turning a corner

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CHUM Limited
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Financial/Mergers & Acquisitions
TORONTO - CHUM Ltd. CEO Jay Switzer could hardly contain himself today when talking of the leaders of his company's radio division.

During a conference call with analysts, he mentioned names left and right (so many this reporter couldn't keep up) crediting them with the record performance of the company's radio division.

"I want to acknowledge and thank the radio division," said Switzer to the call attendees, saying their performance this year was "nothing short of exceptional� we have some of the best sales managers and some of the best programmers.

"I want to publicly thank all the employees and managers," he added, saying CHUM has "the most innovative, creative radio in the country."

CHUM's radio segment comprises its 32 AM and FM stations situated across the country. Revenue in fiscal 2004 amounted to $122.8 million, an increase of 3.7% when compared with fiscal 2003. The company's AM and FM radio stations showed revenue growth in fiscal 2004 of 9.5% and 2.6%, respectively, over the corresponding period last year.

"This increase in revenue, when combined with rigorous management of expenses, resulted in an increase in EBITDA of $6.8 million or 21.7% when compared with fiscal 2003. Operations expenses in the radio segment decreased 2.7% in fiscal 2004 compared with fiscal 2003. This decrease resulted from an active cost/benefit approach to expenditures across all of the company's radio stations." says the press release.

It led to an EBITDA margins of 31% for the year. The company added it does not expect operations expenses to decrease in the radio segment in fiscal 2005.

"The performance of the radio segment was particularly strong in the fourth quarter of fiscal 2004 as revenue and EBITDA increased 6.1% and 27.8%, respectively, over the corresponding period last year. In comparison, and as reported in Trans-Canada Radio Advertising by Market ("TRAM") Report, released by the Radio Marketing Bureau, radio sales in CHUM markets were up 4.3% in fiscal 2004, but were down 1.8% in the fourth quarter. Management attributes the relatively strong performance of its stations in the fourth quarter to an increase in advertising spending in categories targeted to the very saleable adult 25-54 demographic in which the company's radio stations enjoy a strong market position. The revenue performance in the fourth quarter is currently being sustained," says the press release.

On the television side, which includes eight conventional broadcast stations in Ontario and British Columbia and 18 specialty services (MuchMusic, Bravo!, Space, etc.), revenue increased 4% to $427 million on the year. Revenue growth was driven primarily by the company's specialty television stations with each service recording increases in advertising and subscriber revenue.

Advertising revenue for the company's specialty television stations for fiscal 2004 increased 16% and subscriber revenue increased 7.8% over fiscal 2003. In fiscal 2004, the company's digital specialty services (such as CourtTV Canada, Drive-In Classics and SexTV) recorded positive EBITDA as a group. Each individual service also recorded an improvement in operating performance.

Conventional television revenue for fiscal 2004 decreased by 1.5%. The company attributes this decrease primarily to the impact on Citytv Toronto and the New VR in Barrie of the recent addition of two new conventional television stations in the Toronto Market (Toronto 1 and Omni 2) and a decrease in national spot advertising sales in the Ontario market of 1.7%, as measured by the TVB Time Sales Report, says the company.

However, both Citytv Vancouver and the New VI in Victoria performed better than expected and recorded revenue gains in line with the national spot advertising sales markets in British Columbia of 3.7%, as measured by the TVB Time Sales Report. Overall, the combination of revenue growth in specialty television and rigorous cost management resulted in an increase in EBITDA of 13.3%.

Switzer also pointed to what looks like a turnaround for the recently overhauled New VI in Vancouver. With a new news team and a dramatic restructuring which saw the channel "start over from scratch", he explained, the evening news slot has been pulling in 20,000 to 25,000 viewers over the past three weeks, where prior, it was watched by about 3,000 Vancouver Islanders (search on this site for "New VI" to see the stories on the station's changes this year).

However, neither Citytv Vancouver nor The New VI are break-even at this point and Switzer declined to give a timeline on when that might happen.

Switzer also told the conference call that the company is seeing a bit better numbers in terms of sales from its conventional sticks, saying that while the market was still "showing turbulence" bookings are a little ahead of last year's pace. The latter half of calendar year 2003 was a terrible one for conventional broadcasters in general.

For the full release, go to
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