CanWest takes a hit on printing and production arms but sees positive future
WINNIPEG - CanWest Global Communications yesterday reported combined earnings before interest, taxes, depreciation and amortization of $151 million for the third quarter ended May 31, 2003, down 2.5% over the quarter of last year.
"EBITDA for the quarter includes aggregate one-time costs of $21 million related to certain restructuring activities (mostly severance related), primarily in our publishing operations and at Fireworks Entertainment," said the company's press release.
Excluding those one-time costs, combined EBITDA was $172 million, an increase of 11% compared to last year's pro forma result.
Combined revenues in the quarter were $689 million, a 6% increase from the $649 million on a pro forma combined basis for the third quarter of 2002.
Combined cash flow from operations, before investment in, and amortization of film and television programs, and other changes in non-cash operating accounts, was $74 million, off 21.6% compared to Q3 2002.
"The pro forma combined results cover the same basket of assets for 2002 as for 2003, excluding the results of certain newspapers and related assets in Saskatchewan and the Atlantic provinces that were sold in August 2002, and including only the first six months of results of newspaper assets in Ontario that were sold in February 2003," says the release.
CanWest reported net earnings for the quarter of $12 million compared to net earnings of $31 million for the same period last year, reflecting those aforementioned restructuring charges. Excluding those pesky one-time items, net earnings would have been $33 million or a 6.5% increase.
Publications reported EBITDA of $72 million, an increase of 5% from $69 million recorded on a pro forma basis for the third quarter of 2002.
EBITDA for Canadian broadcasting operations was $83 million, an increase of 10% from the corresponding period last year. Revenues, "affected by the NHL playoffs in which two Canadian teams progressed to the later rounds," asserted the press release, "and by the war in Iraq, declined slightly from the third quarter of last year. "Despite these programming disruptions, Global Television continued to have four of the top ten shows in Toronto and 3 of the top ten in Vancouver."
The company's international operations in Australia, New Zealand and Ireland performed well.
The restructuring charge of $21 million noted above is a direct result of cost cutting activities across the company, including integration initiatives such as the Canadian News Desk, the completion of corporate services consolidation projects in Winnipeg, and related staffing reductions at other locations. These projects include the CanWest Information Technology Group, the centralized customer contact centre, and accounting operations.
In addition, the charge reflects one-time costs relating to the restructuring of Fireworks. The restructuring charge, which is related mainly to severance and lease termination charges, will generate immediate cost savings and provide a rapid payback on this significant cost reduction strategy.
"We remain encouraged by the sustained, improving trend that has been evident over the past several quarters, as advertising markets for both television and newspapers rebound, and revenue and cost synergies begin to manifest themselves," said CanWest president and CEO Leonard Asper. "This year-over-year improvement is even more apparent at all our international broadcasting operations where revenues and EBITDA for the quarter grew at accelerated rates, with Network TEN, our New Zealand radio operations and TV3 Ireland all registering EBITDA growth in excess of 30%."
As for the company's outlook for the rest of the year and beyond, it sees bright days ahead, especially for TV, whose up front market was especially strong this year. "Markets for all business segments continue to strengthen," says its release. "Economic indicators in all the economies in which CanWest operates suggest that the positive trend in revenues and EBITDA should continue into 2004.
"In Canada, demand for television advertising rebounded in the fourth quarter. The pace of sales and advance bookings indicate a resumption of year-over-year revenue gains at a level consistent with the significant improvement for the first six months of fiscal 2003. Up-front sales for the first quarter of 2004, and the launch of the new television season, have been significantly stronger than in recent years."
For the full release, go to www.canwest.com.
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