(Adds CEO comments, detail, closing stock price)
By Wojtek Dabrowski
TORONTO, Jan 10 (Reuters) - CanWest Global Communications Corp CGS.TO reported a lower first-quarter profit on Thursday, despite higher revenue, as foreign currency swap losses, restructuring expenses and higher interest costs hurt results.
Canada’s biggest media company also said the performance of its conventional TV channels will be affected by the ongoing Hollywood writers’ strike. But it said the impact should be reduced by the upcoming launch of new reality-TV shows, such as Survivor and the Celebrity Apprentice, as well as other content.
“I don’t think anybody’s surprised by that,” CIBC World Markets analyst Bob Bek said about CanWest’s warning. “As all network television guys on both sides of the border would suggest, it’s a problem.”
However, Chief Executive Leonard Asper told analysts during a conference call the company expects a positive performance from its Canadian TV operations, despite the challenges the writers’ strike may pose.
“The bottom line is we did budget for growth in Canadian television this year and, the writers’ strike aside, we still do expect growth.”
CanWest, which owns Canada’s Global television network and a national chain of daily newspapers, said it earned C$41 million ($40.6 million), or 23 Canadian cents a share, in the three months ended Nov. 30. That was down from a profit of C$66 million, or 37 Canadian cents a share, in the same period a year earlier.
Operating profit jumped to C$221.9 million from C$208.5 million a year before.
The Winnipeg, Manitoba-based company said consolidated revenue rose 8 percent to C$868 million from C$805 million in the same period a year earlier.
CanWest said its interest expense jumped to C$82.4 million from C$42.2 million a year earlier. It had C$27.8 million in interest-rate and foreign currency swap losses, compared with gains of C$8.8 million the year before.
It also said the quarter’s results included C$12 million in restructuring expenses.
Analysts had expected the company to earn 33 Canadian cents a share before one-time items on revenue of C$878.3 million, according to Reuters Estimates.
CanWest and an affiliate of U.S. investment bank Goldman Sachs (GS.N) are buying Canadian specialty-TV group Alliance Atlantis Communications for C$2.3 billion.
Last month, the takeover cleared a major hurdle when federal television regulators approved the deal.
Asper said the company is hoping to receive final and formal approval of the deal shortly and that all required documents have been filed.
CanWest’s publishing revenue rose to C$361.9 million from C$343.9 million a year earlier. Its TV revenue spiked to C$550.3 million from C$423.8 million a year earlier as it added Alliance Atlantis’s broadcast operations to its top line.
The publishing division saw operating profit rise to C$102.2 million from C$87.8 million a year earlier. TV operating profit rose to C$172.9 million from C$124.4 million.
Bek said the company’s newspaper assets performed well, both in terms of revenue and profitability.
“Those assets are good, but they’re rarely this good,” he said.
CanWest shares closed 20 Canadian cents higher at C$6.79 on the Toronto Stock Exchange.
$1=$1.01 Canadian Reporting by Wojtek Dabrowski; Editing by Rob Wilson