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Astral Media eyeing acquisitions

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TORONTO - Astral Media Inc., is increasing its dividend, buying back shares and looking for acquisitions, Astral's CEO said at Wednesday's annual meeting.

"Frankly, we're comfortable to pursue acquisitions in radio, television and outdoor," Ian Greenberg, the Montreal company's chief executive, told reporters after the meeting. "It's not as if there are many (potential targets) in each area. Therefore, if one of the targets that we've identified comes up for sale, that will be our first one," Greenberg added.

Just before the meeting, Astral announced that it is increasing its dividend by 33 per cent and buying back shares on the heels of its best-ever financial year.

Astral's annual dividend will grow to 20 cents from 15 cents a share, costing the company about $11 million, and it will spent up to $85 million to buy back up to five per cent of its shares, which will mean profits are spread over fewer shares.

Those two actions will use up almost all of the $100 million in cash reserves that Astral has amassed, Greenberg said.

"And what will happen is, we'll find ourselves in a year from today in the same cash position we are at now, having paid out the $100 million," Greenberg told reporters.

The company has recently expanded its radio presence into Atlantic Canada from Quebec, with 24 stations now in operation, and is concentrating its outdoor advertising business in Toronto and Montreal.

Operating earnings from those two segments grew by 29 per cent and six per cent respectively in the company's fiscal 2004, which ended Aug. 31.

Operating earnings in its television branch, which counts subscription revenue from specialty television stations including The Movie Network, Super Ecran, Family, Teletoon and MusiquePlus, grew by 18 per cent.

John Riley, president of Astral Television, said the division expects 2005 revenues to benefit from increasing the reach of its subscription video-on-demand service, launched in fiscal 2004. The service allows viewers to order movies at home, with high-quality sound and visuals, and to stop and start the action when they want.

In radio, the company is waiting to hear whether the Canadian Radio-television and Telecommunications Commission will award it a licence for subscription digital radio.

Astral and Toronto-based broadcaster CHUM Ltd. have applied for one of three licences that may become available if Canada follows the lead of the United States in approving this new type of radio broadcasting.

Astral hasn't made public how much starting up a satellite service could cost or how much it could bring in, but Greenberg said the two main U.S. operators, which have been in existence for about four years, predict they'll break even in 2007 or 2008.

He also said that if the CRTC licenses all three parties that made submissions in November - businessman John Bitove's Canadian Satellite Radio Inc. as well as a joint venture between CBC, Standard Radio Inc. and U.S.-based Sirius Satellite Radio Inc. - Astral won't be able to compete.

"There is no way that Astral can have a viable economic model if they license all three because in the end you've got two competitive services, which will have four per cent Canadian content, and we've obligated ourselves to have 65 per cent Canadian content," Greenberg said.

"So it will be interesting to see the decision from the CRTC in April, and after that decision we'll make the plans accordingly."

Astral reported fiscal 2004 earnings in October of $88.5 million on revenue of $518.7 million, up from 2003 earnings of $67.8 million on revenue of $475.7 million.

The company had 1,700 employees as of the end of August.

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