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Category Corporate Date 4/9/2009
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Canwest Global Communications Corp. Reports Second Quarter 2009 Results
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Non-cash impairment charges recorded against Publishing, Canadian television as well as Australian television and Out-of-home
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(Winnipeg - April 9, 2009) Canwest Global Communications Corp (“Canwest” or the “Company”) today reported for the three months ended February 28, 2009 revenues of $637 million compared to $701 million for the same period last year. Operating profit(1) before restructuring and impairment expenses was $75 million for the second quarter, a decline of 31% compared to $109 million in the second quarter of fiscal 2008.
For the first six months of fiscal 2009, revenues decreased 3% to $1.52 billion and operating profit before restructuring and impairment expenses declined by 22% to $295 million.
For the three months ended February 28, 2009, the Company reported a net loss of $1.44 billion – including a non-cash $1.19 billion write-down of goodwill, intangible assets and property and equipment. Approximately 83% of the write-down relates to Canwest’s Publishing operations. For the six months ended February 28, 2009, the Company reported a net loss of $1.47 billion.
The nature of the write-downs are consistent with those of other media organizations throughout North America and which reflect lower future profit expectations as a result of the current outlook for advertising in the operations. All are non-cash charges to income that do not affect Canwest’s liquidity, cash flows from operating activities, debt covenants or have any impact on future operations.
For the three and six month period Canwest reported the following:
in millions of dollars, except per share amount | Three months endedFebruary 28 |
Six months endedFebruary 28 | 2009 | 2008 | 2009 | 2008 | Change | | Reported Results | | Revenue |
637 | 701 | 1,522 | 1,567 | (3)% | | Operating profit before restructuring and impairments | 75 | 109 | 295 | 379 | (22)% | | Operating profit | 15 | 95 | 220 | 319 | (31)% | | Net earnings (loss) | (1,436) | (34) | (1,469) | 7 | n/m | | EPS | (8.09) | (0.19) | (8.27) | 0.04 | | | Adjusted net earnings (2) | | Adjusted net earnings (loss) | (44) | (16) | (16) | 46 |
n/m | | Adjusted EPS | (0.25) | (0.09) | (0.09) | 0.26 | |
“In spite of the recessionary economy and continued losses at most of our local television stations, our underlying businesses were able to generate $295 million in operating profits before restructuring and impairment expenses for the first half of the fiscal year,” Canwest President and CEO Leonard Asper said. “We continue to out-perform the industry in several areas including audience growth. At the same time, our focus on reducing costs while transforming the business should position us to take advantage of a growing advertising market as the economy begins to improve.”
Segmented Results
Publishing
Revenues for the Company's publishing operations for the second quarter were $258 million, 16% lower than revenues of $306 million for the same period in fiscal 2008. Publishing EBITDA of $32 million for the second quarter was down 46% from $60 million in fiscal 2008. For the six months ended February 28, 2009, revenues were $593 million and EBITDA was $106 million down 11% and 35% respectively, from similar periods last year. The declines in revenues and operating profits, partially offset by lower operating expenses, continue to reflect the impact of global economic pressures felt across all markets.
Canadian Television combined (Canadian Television and CW Media)
Canadian television operations, including the CW Media specialty television operations reported second quarter revenues of $234 million, in line with the previous year. Operating profit in the second quarter was $32 million, up 60% compared to $20 million the previous year. For the six months ended February 28, 2009, revenues were $540 million and EBITDA was $108 million flat and up 21% respectively, from similar periods last year. These results continue to reflect the strong industry leading performance of the specialty television operations as well as merger synergies and other cost containment initiatives.
Australian Television
Network TEN's second quarter revenue of $112 million was down 19% from $139 million during the same quarter in fiscal 2008. Network TEN’s EBITDA of $19 million was down 45% from the $35 million a year earlier. For the six months ended February 28, 2009, reported revenues were $314 million and EBITDA was $94 million, down 18% and 32% respectively, from similar periods last year. These results were impacted by the decline in the advertising market and the absence of the Rugby World Cup and AFL Grand Final and the residual impact of the Beijing Olympics.
Highlights of the second quarter and subsequent period
- Canwest announced actions aimed at strengthening its balance sheet including:
- A strategic review of its five conventional television stations in Hamilton (CHCH), Victoria (CHEK), Montreal (CJNT), Red Deer (CHCA) and Kelowna (CHBC);
- $34 million settlement of an arbitration award relating to a dispute with Sun-Times Media Group Inc. (formerly Hollinger Inc.);
- Selling its holdings in Score Media Inc. and;
- Selling the New Republic magazine.
- Canwest digital network attracted on average 7.1 million unique visitors monthly in the News and Information category, a 58% increase from the second quarter last year.
- Canwest has 5 of the top 10 specialty analog channels(3) up from 4 last year. History Television has become the second most watched specialty channel as its audience has increased by 43% and Showcase has increased its audience by 34%.
- Canwest maintained its dominance of specialty digital channels with 8 of the Top 10 digital channels(3).
- Network TEN in Australia launched its new 24-hour digital terrestrial sports channel ONE. ONE is available in both High Definition digital and Standard Definition digital reaching more than 60% of the Ten Television mainland metropolitan markets.
Outlook:
Looking forward, the Company anticipates that advertising revenues will continue to be negatively impacted by persisting uncertain economic conditions, with the exception of specialty channels and digital sectors. Canwest remains focused on reducing operating expenses and improving operational efficiencies while pursuing the reorganization of its capital structure as referred to below.
As previously disclosed and reported in its interim consolidated financial statements for the three and six months ended February 28, 2009, Canwest Media Inc. has not complied with the terms of its senior secured credit facility and has not paid interest under the senior subordinated notes which was due on March 15, 2009. On April 7, 2009, the senior secured lenders agreed to waive the events of default arising as a result of the failure to comply with certain covenants until April 21, 2009. During this period the Company will have limited access to additional credit under the senior secured credit facility. Canwest Media Inc. is in discussions with representatives of an ad hoc committee of holders of 8% senior subordinated note holders representing a significant majority of the aggregate principal amount of the 8% senior subordinated notes regarding a forbearance agreement aimed at allowing sufficient time for a recapitalization of the Company that is satisfactory to all of its stakeholders. Failure to reach agreement on a further waiver from the senior lenders and forbearance from the holders of the senior subordinated notes could result in a demand to immediately repay the related debt.
Notes:
(1) Operating profit is defined as earnings before interest, income taxes, amortization of intangibles and property and equipment, other amortization, accretion of long-term liabilities, interest income, interest rate and foreign currency swap gains (losses), foreign exchange gains (losses), investment gains, losses and write-downs, impairment losses on property and equipment, intangible assets and goodwill, minority interest, interest in earnings of equity accounted affiliates, realized currency translation adjustments and 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. When used in relation to our operating segments it is a GAAP measure in that is our segment profitability measure. The reconciliation of operating profit to net earnings is evident on the face of the following consolidated statements of earnings found at the end of this release.
(2) Excludes the impact of foreign currency and interest rate swap gains/losses, foreign exchange gains/losses, investment gains, losses and write-downs, impairments of property and equipment, intangibles and goodwill, restructuring expenses, broadcast rights impairments, discontinued operations, related income tax effects and future income tax valuation allowances.
(3) In the Adult 25-54 demographic
Forward Looking Statements:
This news release contains certain 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, 2008 dated November 24, 2008 filed by Canwest Global Communications Corp. with the Canadian securities commissions (available on SEDAR at www.sedar.com ), as updated in our most recent Management's Discussion and Analysis for the three and six months ended February 28, 2009. Unless required by law, 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 and Management’s Discussion and Analysis for three and six months ended February 28, 2009 are available on the Company's website: www.canwest.com. Financial statements and Management’s Discussion and Analysis for three and six months ended February 28, 2009 for Canwest Limited Partnership can be found also on www.canwest.com. Financial statements for Ten Network Holdings Limited can be found at www.tencorporate.com.au.
The Company will hold its regular quarterly conference call with analysts on April 9, 2009 at 12:00 noon Eastern Standard Time. The call-in numbers are 416-915-5762 or 800-731-5319. Replays are also available for ten days following the call at 416-640-1917 or 877-289-8525 [using the pass-code 21303371 followed by the pound sign.]
About Canwest Global Communications Corp.
Canwest Global Communications Corp. (www.canwest.com), (TSX: CGS and CGS.A,) an international media company, is Canada’s largest media company. In addition to owning the Global Television Network, Canwest is Canada’s largest publisher of English language daily newspapers and owns, operates and/or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites, radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States.
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For further information:
Media Contact:
John Douglas, Vice President, Public Affairs
Tel: (204) 953-7737
jdouglas@canwest.com
Investor Contact:
Hugh Harley, Director, Investor Relations
Tel: (204) 953-7731
hharley@canwest.com
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Full Press Release with Business Segment Information (143k)