Canwest first half drops 20pc on programming spendup

Brent Impey

CanWest MediaWorks NZ today reported a 20 per cent fall in first half earnings as programming costs soared.

The media company, which owns Radio Live, local radio networks and TV3 and C4, reported a net profit after tax of $13.35 million for the six months to February 28, compared with $16.64 million in the same period a year earlier.

Earnings before interest, tax, depreciation and amortisation (ebitda) declined 10 per cent to $34 million.

The increase in programming costs, flagged by CanWest in October and again at its annual meeting in December, came as the media company bought up large in the first half.

The company's TVWorks division introduced hit comedy My Name is Earl during the period, with returning international favourites such as House, CSI, CSI: New York, Boston Legal, Bones, Trading Spouses, America's Next Top Model, and Rove Live - all performing well.

Programming costs were expected to dissipate in the second half, with CanWest forecasting a full year profit above last year's result.

Total revenue rose 4 per cent to $129.5 million.

CanWest's RadioWorks division recorded 2 per cent revenue growth to $56.9 million, while its TVWorks division lifted revenue by 6 per cent to $72.6 million.

CanWest also incurred higher operating costs relating to the first year of Campbell Live and radio network Radio Live, which was launched in April 2005.

The focus on news appeared to be paying off, however, with 3 News snaring a 37 per cent larger share of the 18-49-year-old market than rival TVNZ in February and March.

Chief executive officer Brent Impey said both RadioWorks and TVWorks had enjoyed solid starts to the calendar year.

RadioWorks bought Orewa-based Times FM, and Queenstown-based Q92FM during the first half -- both high growth areas, Mr Impey said.

The company was open to more "appropriately priced" acquisitions in future, he said.

Shares in CanWest, which listed in July 2004 when its Canadian owner, CanWest Global Communications Corp, floated 30 per cent of the company on the local bourse, last traded on Friday at $1.72.

Mr Impey said that while the group had seen a modest softening in the advertising market, that was more than offset by market share growth in the television division.

"It is important we keep things in perspective, and recognise that the New Zealand economy is not going backwards," Mr Impey said.

"As a high profile media business, we believe that it is important not to fall into the trap of talking the New Zealand economy down unnecessarily -- while at the same time being transparent about current economic reality."

CanWest was coming off an extremely good growth phase that had lasted for several years.

Mr Impey said that solid growth was expected to continue for the "foreseeable future".

- NZPA