July 15, 2010 / 1:33 PM / in 8 years

UPDATE 2-Canwest posts profit as ads rise, costs fall

* EPS C$0.09 vs year-ago loss of C$0.62

* Revenue up 3 pct at C$557 mln (Adds background, detail, stock price)

OTTAWA, July 15 (Reuters) - Canwest Global Communications Corp CGS.V said on Thursday that a stronger advertising market and lower operating costs helped Canada’s biggest media company post a quarterly profit.

The results come as Canwest’s broadcast business is being acquired by cable and telecom company Shaw Communications Inc (SJRb.TO) for about C$2 billion ($1.92 billion) while its newspaper unit has been sold to a bondholder group for approximately C$1.1 billion.

Canwest, which crumpled under the weight of an acquisition-fueled debt load of nearly C$4 billion, had won creditor protection for the two units.

The Winnipeg-based company said its newspaper operation, comprising 46 community and daily newspapers, including the National Post, had emerged from creditor protection on Wednesday. The unit’s new owner, Postmedia Network, has said it plans an initial public offering for the business.

The broadcast operation, which includes the national Global TV network and such specialty channels as HGTV and Showcase, is expected to emerge from creditor protection by autumn, Canwest said.

For the third quarter ended May 31, Canwest said it earned C$16 million, or 9 Canadian cents a share, compared with a year-earlier loss of C$111 million, or 62 Canadian cents a share.

Revenue, on a going concern basis, increased 3 percent to C$557 million from C$543 million.

Operating profit rose to C$150 million from C$74 million.

Revenue and operating profit included results from a second television broadcast network, in which the stations were sold or closed as of Aug. 31, 2009, Canwest said.

Excluding those results and restructuring costs, quarterly revenue rose 7 percent and operating profit grew 29 percent, the company said.

Publishing revenue increased 1 percent to C$270 million, while operating profit rose 12 percent to C$51 million. Television revenue rose 5 percent to C$287 million and operating profit increased 39 percent to C$73 million.

Operating costs fell to C$406.4 million from C$430.4 million and restructuring expenses were nearly halved to C$1.1 million.

Canwest made its first big expansion push in 1989, buying the Global TV network. It then bought a 20 percent stake in New Zealand’s TV3 and a controlling share of Australia’s Network Ten in the early 1990s.

In 2000, Canwest paid C$3.2 billion to buy a chain of newspapers from former press baron Conrad Black’s Hollinger Inc. In 2007, it partnered with an affiliate of U.S. investment bank Goldman Sachs to buy specialty TV group Alliance Atlantis Communications for C$2.3 billion.

An advertising slowdown in 2008 led to sharp cost-cutting, job cuts and big losses. In 2009, it defaulted on interest payments to bondholders.

Canwest shares were unchanged at 4.5 Canadian cents on the TSX Venture Exchange on Thursday.

$1=$1.04 Canadian Reporting by Susan Taylor; editing by Rob Wilson

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