Astral Media Inc. F2Q10 (Qtr End 02/28/10) Earnings Call Transcript - TheStreet

Astral Media Inc. F2Q10 (Qtr End 02/28/10) Earnings Call Transcript

Astral Media Inc. F2Q10 (Qtr End 02/28/10) Earnings Call Transcript
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Astral Media Inc. (AMC.A)

Q2 2010 Earnings Call

April 8, 2010 10:30 am ET

Executives

Andre Bureau – Chairman

Ian Greenberg – President & CEO

Claude Gagnon – SVP & CFO

Jacque Parisien – Group President – Astral Media Radio & Astral Media Outdoor

Alain Bergeron – VP Corporate Communications & CMO

Robert Fortier – VP & Controller

Analysts

Adam Shine - National Bank Financial

Paul Steep – Scotia Capital

Scott Cuthbertson - TD Newcrest

Ben Mogil - Thomas Weisel Partners

Tim Casey – BMO Capital Markets

David McFadgen – Cormark Securities

Drew McReynolds - RBC Capital Markets

Michele Monger – Unspecified Company

Ross Marowits - The Canadian Press

Unspecified Media Questioner

Presentation

Ope

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[French Translation Not Available] Good morning ladies and gentlemen. Welcome to the Astral Media fiscal 2010 second quarter financial results conference call. (Operator Instructions) It is now my pleasure to introduce Mr. Andre Bureau, Chairman of the Board of Astral Media.

Andre Bureau

Good morning everyone [French Translation Not Available] I am Andre Bureau, Chairman of the Board of Astral Media and I am joined this morning by Ian Greenberg, President, and Chief Executive Officer; Claude Gagnon, Senior Vice President, and Chief Financial Officer; Jacque Parisien, Group President, Astral Media Radio and Astral Media Outdoor; Robert Fortier, Vice President Finance; and by Alain Bergeron, Vice President Corporation Communications and Chief Marketing Officer.

And on behalf of all of us here in Montreal I’d like to welcome you to this fiscal 2010 second quarter conference call. In a few moments Ian and Claude will comment on the overall results. We will then proceed to the question-and-answer period and as usual, we will take questions first from analysts, then from the media.

[French Translation Not Available]

Ian Greenberg

Merci Andre, and good morning everyone and thank you for joining us. I’m very pleased to be reporting strong overall second quarter results which were achieved in a challenging environment. We are also encouraged to see signs of increased activity in our advertising markets, fueled by gradually improving economy.

Astral’s consolidated revenues for the quarter increased by 4% to $218.3 million, while EBITDA grew 6% to $62.6 million over the same quarter last year. Net earnings reached $33.6 million while basic earnings per share reached $0.60 growing a very solid 24% and 25% respectively over the corresponding period last year, enabling us to report a 54

th

consecutive quarter of profitable growth and the best second quarter in the company’s history.

In television, revenues for the second quarter grew by 6% and EBITDA grew by a strong 14% over the same period last year. This performance was fueled by a 7% growth in subscription related revenue, an encouraging rebound of our television advertising revenues derived from broadcasting activities which grew by 11% in the second quarter.

The number of our pay television subscribers increased by 43,000 subscribers year over year and is now surpassing the 1.8 million mark. Our on demand and interactive television activities continue to prove popular with our subscribers. After the successful deployment of our TMN Online, Family Online, and Playhouse Disney Online services with Bell TV we have recently added our highly acclaimed HBO programming to the Bell TV online offering.

Now turning to radio, revenues in the second quarter declined by 2% which compares favorably against a 3% drop recorded by the radio markets in which we operate. As we see some signs of increased activity of the radio advertising, for the first six months our advertising revenues declined by only 1% while the overall markets in which we operate decreased by 5%.

Radio EBITDA declined by 14%. In addition to the slightly lower revenues this decrease was in large part explained by continuous strategic investments in radio programming, branding, and sales activity despite the economic recession. For example the second quarter saw the return of the Les Grandes Gueules, across our 10-station NRJ network in Quebec, with their highly popular radio show.

Last December we also announced the rebranding of our Toronto EZ Rock station to the new [Boom] FM with key programming and personality line up changes. In March our radio group also announced the signature of a long-term agreement with Chicago based Emmis Interactive, a leading provider of interactive and social media services for the radio industry.

This agreement will allow us to upgrade our 82 radio websites by the end of the summer and will consolidate and strengthen our concerted interactive offering to our advertisers. As we move to Q3 we anticipate seeing continued momentum on radio advertising activity with mid single-digit increases or better.

And it also appears to us that the radio industry in Canada for the first time in the last four quarters will return to year over year growth in the third quarter. Our outdoor advertising group reported solid growth in the second quarter thanks to a strong overall performance and the contribution of our recently expanded national digital advertising network.

Outdoor’s revenue grew by 23% while its EBITDA more than doubled over the same quarter last year. Throughout the economic downturn we have continued to invest strategically in sales, programming, and branding initiatives across all our platforms. This long-term vision has allowed us to make important headway in further strengthening our position for future growth in several of the key markets in which we operate.

As we have said in the past quarters we are now expecting the advertising market to rebound as we turn to the second half of fiscal 2010 and gradually reap the benefits in an improving economy.

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