Canwest Global Communications (TSXV:CGS) delivered another quarterly loss on Friday, with the still-sluggish advertising market pulling down overall revenues by 13 per cent during a period that saw little in the way of good news for a company in a major restructuring.
The Winnipeg-based media conglomerate posted a $111-million loss worth 62 cents per share for the period ended Aug. 31, a fraction of the massive $1.02-billion loss, $5.74 per share, logged a year earlier when Canwest booked a writedown on its money-losing Canadian television operations.
The results were not surprising, but indicative of the array of challenges Canwest faces as it works to recover from a crippling economic downturn that undercut revenues and left it unable to cope with a massive $4-billion debt.
Some of its divisions were placed under creditor protection, including its conventional TV operations, as it etches out a restructuring plan with its major creditors. Overall revenue dropped to $624 million from $721 million, which Canwest president and CEO Leonard Asper attributed to the pressure a difficult economic climate has placed on advertisers.
“While the abrupt and unprecedented decline in advertising revenue had a significant impact on Canwest, most business units continued to perform better than the industry average with online and specialty television reporting growth even in the face of the recession,” Asper said, basing his estimates on data from the Television Bureau of Canada.
Like other advertising-dependent media companies, Canwest has felt the impact of a global economic slowdown that began gripping Canada in October 2008. It is also grappling with the huge debtload, accumulated several years earlier as the broadcaster expanded into newspaper publishing and specialty TV.
Canwest said its operating profit — which excludes a number of items counted in net earnings — fell by 58 per cent to $25 million from $60 million. Stripping out restructuring costs, impairments and other one-time expenses, the operating profit would have been more than twice as high — $52 million, down a more moderate 14 per cent from the fourth quarter of 2008.
However, Canwest posted a loss of $1.69 billion for the fiscal year, versus a $1.03 billion loss in fiscal 2008.
Canwest “still has a lot of obstacles to overcome before it can realistically determine whether it will survive this transitional period,” said Carmi Levy an analyst at AR Communications Inc.
“We are nowhere near the point where we can assess whether Canwest has succeeded or not.”
Canwest has said it hopes to complete its restructuring process by the end of January.
Aside from Global Television, the conventional TV network that’s operating under court protection, Canwest owns several large-market daily newspapers and has a stake in specialty cable channels that aren’t under creditor protection. It also owns the National Post newspaper, which was moved under the same corporate umbrella as other dailies earlier this year.
Canwest has also been grappling with its investment partner Goldman Sachs & Co., filing documents in court earlier this week which showed the two companies, which teamed to buy the assets of Alliance Atlantis, are now sparring over specialty channels they both own.
In court documents, Canwest executives asked that the court side with them over the channels, which it says are crucial to restructuring the company and appeasing creditors.
Goldman filed documents which said it offered to help Canwest repeatedly throughout the year, but the two sides were unable to reach mutually favourable terms.
In quarterly earnings, revenue from publishing fell to $238 million in the quarter spanning the months of June, July and August, down 20 per cent from $299 million for the same period of fiscal 2008 — which predated a major global economic slowdown.
Publishing operating profit of $25 million for the fourth quarter was down 54 per cent from $54 million in the same period of fiscal 2008, Canwest said.
Canwest’s Canadian conventional and specialty cable operations reported fourth-quarter revenues of $184 million, 11 per cent lower than the same period in the previous year.
Operating profit in the fourth quarter was $12 million, compared to a loss of $400,000 the previous year.
Canwest’s Australian television operations, which have been sold, accounted for $171 million of revenue and $19 million in operating profit in the fourth quarter.
For the full year ended Aug. 31, Canwest overall revenue was $2.87 billion, down eight per cent from $3.13 billion in fiscal 2008.
Operating profit, which is a non-standard measure of profitability, was $310 million including restructuring and other expenses, down 44 per cent from $551 million in fiscal 2008.
Canwest shares closed unchanged at eight cents on the TSX Venture Exchange.