TORONTO (Reuters) - Canwest Global Communications Corp CGS.TO, Canada’s biggest media company, swung to a third-quarter loss on Friday as restructuring and other expenses rose, but revenue climbed 15 percent and its battered shares jumped sharply.
Canwest, which owns the Global television network, a national chain of newspapers and a roster of specialty-TV channels, said it lost C$28.4 million ($28.1 million), or 16 Canadian cents a share, in the three months ended May 31. That was down from a profit of C$8.4 million, or 5 Canadian cents a share, in the same period a year earlier.
However, the Winnipeg, Manitoba-based company said its adjusted results — a figure closely watched by investors — showed a profit of C$13 million, or 7 Canadian cents a share.
The adjusted results exclude items such as foreign currency and interest swap gains or losses, foreign-exchange items, or investment gains, losses and writedowns.
The report appeared to please investors, as Canwest shares jumped 15 percent, or 30 Canadian cents, to C$2.32 on the Toronto Stock Exchange. However, the shares remained well below the C$9.78 level of a year ago.
“You are looking at a company that has, certainly on the operational side, not covered itself in glory,” said Gavin Graham, chief investment officer at the Guardian Group of Funds in Toronto.
“It looks like ... it is actually starting to show some improvement, which, heaven knows, is about time.”
Canwest’s consolidated debt, which has drawn scrutiny from some analysts, was C$3.3 billion at the end of May, down from C$3.6 billion as of August 31, 2007.
Canwest said its interest expenses rose to C$78.7 million during the quarter from C$45.3 million. As well, it took C$24.7 million in investment losses and writedowns.
Revenue was C$851.8 million, up 15.4 percent from C$738.1 million, due in part to growth in its specialty channels and publishing assets.
Analysts had expected the company to earn 7 Canadian cents a share on revenue of C$847.9 million, according to Reuters Estimates.
Canwest and an affiliate of U.S. investment bank Goldman Sachs (GS.N) bought Canadian specialty-TV group Alliance Atlantis Communications last year for C$2.3 billion to broaden its television offering.
“Given our diversity and the strength of our properties, I believe that Canwest’s stock is significantly undervalued,” Chief Executive Leonard Asper told analysts in a conference call.
Asper said the company is performing well in generating content, as well as selling advertising and subscriptions. He added that analysts and media should “not get caught in what are today’s accounting principles” and instead focus on the underlying operating strength of the company.
The company said that although the performance of its conventional TV business will be “somewhat dependent” on advertising markets, and in particular on the impact of the Beijing Olympic Games in the fourth quarter, “we continue to work on strategies to improve the overall business model going forward.”
In the third quarter, Canwest closed four small, unprofitable operations. It said it will continue to assess its asset base to ensure it is operating and investing in the assets that have the most potential.
The company said it was looking to sell British radio properties.
Additional reporting by Jennifer Kwan; editing by Rob Wilson