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Newcap shows net gains

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Publicly Traded Canadian Broadcasters
DARTMOUTH, N.S. - Saying that the majority of its radio stations posted revenue improvements in the first quarter of 2004, Newfoundland Capital Corporation saw consolidated revenue climb by 7% to $13.1 million compared to the same quarter of 2003.

"This 7% improvement is due to a combination of the new station launch in Ottawa, Ontario and same station growth. The company had organic growth in many markets with Newfoundland & Labrador experiencing 12% growth. Organic growth of 5% compares favorably with the industry average growth rate of 3% for the same period," says the company's press release.

Net income for the first quarter was $2.6 million, a significant increase over the prior year's Q1 (which came in at $490,000), primarily due to the gain on disposal of the company's investment in publisher Optipress Inc., which it sold earlier this year. "The proceeds of $11.3 million were used to reduce debt which will allow the company to take advantage of expansion opportunities," says this morning's press release.

"In addition to investigating possible business acquisitions, we have continued our strategy of applying for new FM broadcast licenses from the (CRTC)," it continues. "In early March we made a presentation to the CRTC for new FM radio licenses in Saint John and Fredericton, New Brunswick. The company's presentation was well-received and we anticipate a decision late this year.

Newcap has also submitted an application for a new FM license in Ottawa, Ontario, where it already operates HOT 89.9 FM. A hearing date for this application has not as yet been set.

"In Alberta, the planning for the six new FM licenses is well underway and we hope to have most of the services on-air by year end," added the company of its western moves. The company requested and received CRTC approval for three new FM licenses and permission to convert three AM signals to FM. Implementation of these six new FM services will occur throughout 2004 and 2005.

Newcap owns 61 licenses across Canada - 31 FM and 30 AM - with a significant presence in Alberta and Atlantic Canada.

As for the ad market in general, Newcap is cautious. While acknowledging the fact that Q1 is always a slow selling time, in relation to the rest of the year, it said: "The radio advertising market continues to lack long-term visibility."

However, the broadcaster has made - and is continuing to make - moves on costs. "The company continues to improve operating efficiencies in every market," reads the release. "We are being especially aggressive in Alberta where we have restructured several systems to increase revenue and reduce expenses leading to better operating results. These initiatives combined with six new FM signals coming on-line will improve operating results throughout Alberta."

And, as all radio station groups are saying, Newcap is looking to buy: "The company will pursue all acquisition and new license opportunities in order to increase our presence in growth markets and enhance shareholder value," adds the release.
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