Canwest Takes Q3 Loss on Big Newspaper Impairment Charge

By: Mark Fitzgerald Canwest Global Communications Corp. Friday reported a quarterly loss of C$110 million on a big impairment charge taken on its newspapers.

Canwest, publisher of the National Post and the largest chain of English-language papers in Canada, said it took a non-cash C$247 million impairment of goodwill charge for the third quarter of its fiscal year ended May 31 (C$1=US$0.859).

"The nature of the impairments are consistent with those of other media organizations throughout North America and reflect lower future profit expectations as a result of the current outlook for advertising revenues in the operations," Canwest said.

In the third quarter, Canwest's loss widened to C$110 million (or 62 Canadian cents a share) from a loss of C$28 million or 16 Canadian cents in the year-ago period.

Without the impairment charge and other special items, the company had a loss of 32 Canadian cents a share for Q3 compared to a profit of 7 Canadian cents a year ago.

Overall revenue in the quarter fell 14% to C$727 million from C$846 million.

Revenue from Canwest's publishing operations for the third quarter were C$269 million, down 19% from the year-ago quarter.

Q3 publishing EBITDA (earnings before interest, taxes, depreciation and amortization) plunge 42% to C$46 million.

Canwest is reeling under C$4 billion of debt and had vowed to craft a recapitalization plan by mid-July. The media giant, which holds extensive broadcast properties in Canada and Australia, skipped a payment on some of its debt in March that put it in technical default of virtually all its loan agreements. Canwest has been operating under repeated "forbearance" periods from its banks, essentially ignoring the default event. The current forbearance period expires July 14.

President and CEO Leonard Asper, whose family controls the Winnipeg-based company said the results show that even in a difficult economy it has managed "industry leading results."

"While much attention has been focused on our efforts to recapitalize, we are continuing to invest in our businesses in order to drive operating results," he said in a statement. "This includes selling non-core assets, purchasing a strong television line-up for next season, investing in quality domestic programming, focusing greater resources on local audiences in publishing, and building our digital media properties, online video and other content."