Astral Media CEO Discusses F4Q10 Results - Earnings Call Transcript

Astral Media CEO Discusses F4Q10 Results - Earnings Call Transcript
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Astral Media Inc. (

AAIAF.PK

)

F4Q10 (Qtr End 08/31/10) Earnings Call

October 27, 2010 02:00 pm ET

Executives

Andre Bureau - Chairman

Ian Greenberg - President and CEO

Claude Gagnon - SVP and CFO

Robert Fortier - VP, Finance

Jacques Parisien - Group President, Astral Radio and Astral Outdoor

Sylvia Morin - VP, Branding and Corporate Communications

Analysts

Paul Steep - Scotia Capital

Adam Shine - National Bank Financial

Drew McReynolds - RBC Capital Markets

Peter MacDonald - GMP Securities

Scott Cuthbertson - TD Securities

Tim Casey - BMO Capital Markets

David McFadgen - Cormark Securities

Colin Moore - Credit Suisse

Presentation

Operator

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Welcome to the Astral Fiscal 2010 Fourth Quarter and Yearend Financial Results Conference Call. At this time all participants are in a listen-only mode. I would like to remind you that after the presentation the analysts will be invited to ask questions first followed by the members of the media. Instructions will be provided at that time for you to jump for questions. I like to remind everyone that this conference is being recorded on Wednesday October 27, 2010 at 2:00 p.m. Eastern Time. (Operator instructions)

It is now my pleasure to introduce Mr. Andre Bureau, Chairman of the Board of Astral. Please go ahead, sir.

Andre Bureau

I am Andre Bureau, Chairman of the Board of Astral and I’m joined this afternoon by Ian Greenberg, President and Chief Executive Officer, Claude Gagnon, Senior Vice President and Chief Financial Officer, Robert Fortier, Vice President, Finance, Jacques Parisien, Group President, Astral Radio and Astral Outdoor, and Sylvia Morin, Vice President Branding and Corporate Communications.

On behalf of all of us here in Toronto, I would like to welcome you to this fourth quarter and year end conference call for fiscal 2010. During the course of this call, Ian and Claude will give you an overview of the results, after which we will proceed with the question and answer period as usual. We will take questions from analysts first followed by questions from the media.

Ian Greenberg

Good afternoon everyone and thank you for joining us this afternoon. Fiscal 2010 was a solid year for Astral and it marked our 14th consecutive year of profitable growth. If we exclude the impact of the retroactive Copyright Board

tariff increases a 56th consecutive quarter. I am particularly pleased with the results delivered by each of our business unit. Each of these units posted solid performances in a challenging economic environment and they recorded revenue gains for both the quarter and the year as a whole.

In fact, fourth quarter performance has showed encouraging signs of recovery for the advertising market, building momentum into the first quarter, the new fiscal year and hopefully beyond.

For fiscal 2010 Astral’s overall revenues totaled 961 million up 6% compared to last year. Excluding the impact of the Part II license fee accrual reversal and the Copyright Board tariff increases, EBITDA rose 5% to 307 million versus 293 million in fiscal 2009. Net earnings for fiscal 2010 totaled a 175 million or $3.11 cents per share for increases of 13% and 12% respectfully. These also exclude the impact of a future income tax recovery recorded this year and an impairment charge booked last year.

Now let me briefly turn to the 2010 fiscal and fourth quarter performances of each of our divisions. Our television group recorded revenue growth of 7% for the year and 8% for the quarter. For the year, revenue growth stemmed from an overall prime and subscriber revenues of 6% and the robust 11% increase in advertising revenue. For the fourth quarter, subscriber revenue rose 5% and advertising revenue rose 25%.

On the pay TV side the number of subscribers for the movie network and Super Écran grew by 89,000 to 1,848,000 a solid 5% increase year-over-year. Overall, the performance of the pay TV group was lifted by the launch of new high quality television series and exclusive programming, HBO Canada, as well as the continued expansion of digital distribution, high definition service, and online offerings. More recently and with a view to broadening the reach of our content, we signed two agreements with Rogers, first for the distribution of several of our TV services such as TMN, HBO Canada, and MoviePix on the Rogers on-demand online platform, and second to add the distribution of Playhouse Disney through the Rogers on-demand and online packages.

Now, let me turn to our radio group. Over the past year radio revenues grew 3% ending the year at 334 million. Fourth quarter revenues climbed 7% over the corresponding period last year, another illustration of a strengthening advertising market. All of our 83 radio stations websites have now deployed the new MS interactive platform. This provides our stations with the desired flexibility to develop local online content that can more effectively engage the listening audience with both advertisers and on-air personalities.

Finally, let me briefly cover our out of home group 2.57, it reported revenues of 77 million a solid 10% growth over last year, and for the fourth quarter out of home saw a healthy increase of 19%. Both our new digital outdoor advertising network in Montreal, Vancouver and Toronto as well as the Toronto street furniture program contributed to this solid performance. I will now ask my colleague Claude Gagnon to give you a more detailed overview of other financial information for the quarter and the year.

Claude Gagnon

Thanks a lot, Ian. Just a couple of quick notes, with regard to our cash flow or cash generation, in Q4 we reimbursed the $10 million of our bank dept which bring the total reimbursement for the year to $105 million and since we booked that in October 2007, we’ve now have reimbursed a

total of $235 million which brings our bank debt balance down to $590 million. That leaves us with a comfortable net debt to EBITDA margin of 1.9 and subsequent to year end in fact this week we repaid another $10 million of our bank debt.

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