Revenue up, earnings down at CanWest

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TORONTO -- Canadian broadcaster CanWest Global Communications on Thursday recorded lower third-quarter earnings despite surging revenue.

Earnings for the three months ending May 31 came to CAN$8.4 million ($8 million), compared with earnings of CAN$13.2 million in 2006. CanWest Global said its earnings fell largely because of a recovery of income taxes in 2006 owing to nonrecurring items.

CanWest Global, which runs two TV networks and newspapers in Canada, said revenue jumped to CAN$738 million ($702.5 million) during the latest quarter, against a year-earlier CAN$687 million.

The latest financial results follow the company's decision to abandon plans to sell its 56% holding in Australia's Ten Network Holdings Ltd. It will instead convert its investment into a controlling stake by exchanging shares and convertible debentures in Ten Group Pty Ltd into ordinary shares in Ten Network.

Spinning off the Network Ten stake is expected to help ease CanWest Global's long-term debt load of CAN$2.7 billion.

Canadian newspaper revenue was up slightly to CAN$333.6 million ($317 million), compared with CAN$324 million in 2006. But Canadian TV revenue, mostly from U.S. network series that air in primetime here, were down to CAN$182 million ($173.3 million), against a year-earlier CAN$187.3 million, thanks to a "softness" in conventional TV airtime sales.

Australian TV revenue, by contrast, jumped to CAN$179.7 million ($171.4 million), against CAN$148.7 million in 2006.

CanWest recently sold its New Zealand TV assets for CAN$309 million ($294 Million).

CanWest Global also is set to take possession of rival broadcaster Alliance Atlantis Communications as part of a CAN$2.3 billion ($1.99 billion) takeover deal largely financed by Goldman Sachs & Co.

CanWest Global executives told analysts during a conference call Thursday that they are considering splitting Ten Network and Eye Corp., the Australian outdoor advertising business, into two separate companies.

Initially, that would enable CanWest Global to finance each division separately, but ultimately such a move would ready both companies to be spun off into separate publicly-traded companies.
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