Damned ‘cost containment initiatives’
What do the news-owner-speak words “cost containment initiatives” actually mean. Check the number of newsroom bods working at CKNW Radio now (April 6, 2006), compared with a month ago. The Vancouver station has undergone “appropriately structured” re-structing (wink, wink).
The text below is part of a CanWest press release, the full text of which is available on its web site. Note the words “cost containment initiatives.”
Re-typed press releases look like news, they taste like news and fill the space between the ads like news. So what’s the problem?
CanWest MediaWorks Income Fund Reports Solid Q2 Revenue Growth
TORONTO, April 5 /CNW/ - CanWest MediaWorks Income Fund (the "Fund") today announced financial results for CanWest MediaWorks Limited Partnership (the "Partnership") for the second quarter and six months ended February 28, 2006.
Revenue for the second quarter was $279 million, an $11.8 million or 4% increase over the same period last year. The revenue increase was attributable to gains in ROP advertising at the metropolitan daily newspapers, the impact of new products, Dose and Metro, and the continued expansion of online advertising. ROP advertising was particularly strong in the national category, which offset some weakness in classifieds. On a combined print and online basis, classifieds showed a slight increase in the quarter. Retail revenue showed modest growth in the quarter. Interactive revenue increased $1.4 million or 22% compared to prior year with strong gains in FPInfomart and general advertising on canada.com. Inserts continued to demonstrate good growth with year-over-year gains in the quarter of 4%. Circulation revenue increased slightly with price increases more than offsetting a slight decline in number of copies sold.
EBITDA(1) for the second quarter was $52.3 million compared to $58.2 million for the same period last year. The EBITDA decline was impacted by severance costs in the quarter related to the implementation of cost containment initiatives and start-up losses associated with Dose and Metro. Severance costs in the quarter totaled $5.8 million compared to $0.5 million in the same period last year. Adjusting for severance costs and Dose and Metro start-up losses, EBITDA for the second quarter was $61.4 million representing an increase of 1% compared to $60.8 million for the same period last year after comparable adjustments including the add-back of the Ravelston Management contract.
Distributable cash for the quarter was $39.0 million or $0.18 per unit. Cash distributions for the quarter totaled $0.25 per unit. As we have noted previously, due to the seasonal nature of newspaper advertising revenue, we expect distributions declared to exceed distributable cash in the second and fourth quarters and the shortfall will be offset by higher distributable cash generated in the first and third quarters. For the period October 13, 2005 to February 28, 2006 distributions declared were 93% of distributable cash. Net earnings in the quarter were $36.7 million compared to $5.0 million in the same quarter last year. The increase in net earnings primarily reflects lower taxes due to the change in corporate structure to a Limited Partnership and lower financing costs.
Commenting on the results, Peter Viner, President and Chief Executive Officer of the Limited Partnership said, "We delivered another strong quarter of revenue gains thanks to the success of our newspapers in Western Canada, where the economy continues to pace well ahead of the rest of the country. During the quarter, we implemented a number of cost containment initiatives, which we believe will position us to deliver year-over-year EBITDA growth in fiscal 2006. We are also pleased with our performance to date in generating distributable cash in excess of unitholder distribution requirements."
Six Months Ended February 28, 2006
For the six-month period, revenues totaled $593.1 million, representing a $26.4 million or 5% increase over the same period last year. Revenue growth for the first half of the year was largely driven by increases in retail and national ROP advertising, inserts, and strong growth in Interactive revenues. Revenue growth is more heavily weighted, on a same-store basis, to the Western Canadian metropolitan daily newspapers.
EBITDA for the six-months of fiscal 2006 was $134.6 million compared to $145.6 million for the same period last year. EBITDA declines are attributable to severance charges and start-up losses at new publications, Dose and Metro. Distributable cash for the period October 13, 2005 to February 28, 2006 was $86 million or $0.40 per unit. Distributions declared for the period October 13, 2005 to February 28, 2006 totaled $0.37 per unit. For the six months ended February 28, 2006, net earnings were $67.5 million compared to $25.8 million in the same period last year. The increase in net earnings primarily reflects lower taxes due to the change in corporate structure to a Limited Partnership and lower financing costs.
Commenting on the outlook for the rest of the year, Peter Viner, President and Chief Executive Officer, said "Our outlook for the remainder of the year is positive. We expect continued revenue growth in retail and national ROP, inserts, and online classifieds. Print classifieds will continue to be a challenge, but our integrated print and online strategy is helping to mitigate softness in this category. We expect to see the full impact of cost containment initiatives implemented this quarter in the second half of the year and, supported by attractive newsprint pricing arrangements and fixed interest rate costs, the Fund is positioned for growth in distributable cash."