Profits for CanWest head north

Canada's largest media company has eventful year

CanWest Global Communications, Canada’s largest media company, is rounding off an eventful year with an uptick in fiscals thanks to gains from the sale of some assets, as it awaits a crucial regulatory hearing into its purchase of Alliance Atlantis Communications.

Net income for the fourth quarter ended Aug. 31 was C$197 million ($209 million,) up 27%, on revenue up 11% at $720 million.

“All our operations showed marked improvement over the previous year,” said prexy and CEO Leonard Asper, with Canadian TV maintaining audience share versus its competitors.

During the quarter the Winnipeg-based company enjoyed gains of $267 million on the sale of its New Zealand media assets and its Canadian radio operations as well as another $174 million last year on the sale of TV3 Ireland.

In August CanWest closed its agreement, in partnership with Goldman Sachs Capital Partners, to acquire the broadcasting assets of Alliance Atlantis Communications for about $1.6 billion, pending regulatory approval. The Canadian Radio-Television and Telecommunications Commission is skedded to begin its hearing into the deal on Nov. 19.

Unions repping CanWest employees are expected to picket the hearing, after the company announced in October that it is pink-slipping 200 newsgathering staff. The unions complain that the layoffs are part of cost-saving squeeze the company will increasingly rely on to pay for the AAC purchase and to cut its $3.8 billion debt.

They also oppose the AAC deal, in which GS contributed $509 million compared to CanWest’s $278 million (with the remainder of the $1.6 billion being borrowed), saying it gives foreigners effective control of the company, something that runs contrary to Canadian law.

CanWest reported that, on an unaudited basis, Alliance Atlantis’ pay TV operations reported revenue of $341 million for the year, up 9%, with bottom line profits of $107 million, “before corporate costs allocations and non-recurring items,” up 7%.

Brass told investors in a conference call that despite a soft fourth quarter for TV revenue, (which it blamed primarily on a later fall launch than last year), CanWest is continuing to gain ground.

In addition to increasing audience numbers in the 18-49 year demo, Asper described the rebranding of CanWest’s second Canadian terrestrial network, CH as E! as an unmitigated success.

“The television season launched to excellent results,” he said. “We really are in a dead heat with CTV in key markets.”

For the year, CanWest’s bottom line profit was $296 million, up from $190 million a year ago on revenue of $3.037 billion, up 7%.

Publishing revenue was up 2% at $1.362 billion, while revenue from Canadian TV climbed 4% to $724 million, as the company continues its aggressive pursuit of rival CTV for audience share with buys like “Survivor,” “House,” “Prison Break” and “Heroes.”

In Australia, the company’s Network Ten contributed $217 million to CanWest’s consolidated operating profit, up 4% from a year ago, thanks primarily to a firming of the TV ad market down under.

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