Shaw Q1 earnings down as result of Canwest takeover
As expected, the Canwest takeover put a major dent in the company's Q1 earnings. The company also annouced it would delay its wireless launch by three months.
Acquiring the former Canwest Global Communications Corp.’s TV assets has put a big dent in Shaw Communications’ bottom line.
Despite higher overall revenue, the western Canadian cable giant on Thursday post first quarter earnings down 82% to $20.3 million, against a profit of $114.2 million in 2010.
Shaw Communications’s revenue line rose 19% to $1.08 billion.
But earnings plunged due to a raft of one-time charges associated with the recent $2 billion takeover of Canwest Global’s broadcast assets, which have been rebranded and relaunched as Shaw Media.
That acquisition, which closed during the latest financial quarter, led Shaw Communications to record a charge of $139 million for the discounted value of a $180 million benefits packaged demanded by the CRTC over seven years to complete the $2 billion takeover.
The latest frame also saw Shaw Communications include a one-time $58 million charge for acquisition and restructuring costs, which include fees for lawyers and consultants and employee pay-out packages.
The Canwest Global takeover also had Shaw Communications recording a $3.3 million foreign exchange gain on unhedged long-term debt, and $2.4 million in other one-time gains.
Shaw Communications also took on added debt obligations to swallow the former Canwest Global’s TV assets, including around $815 million of debt outstanding in the former CW Media, and a term loan due 2015.
After closing the Canwest Global deal, Shaw Communications refinanced the CW Media term loan to generate interest cost savings.
The other big news Thursday from Shaw Communications was a decision to delay by three months an upcoming wireless phone division launch, as it cited a need to take a ‘disciplined approach’ to its wireless rollout.
Shaw’s wireless woes came on top of the cable operator losing a higher-than-forecast 7,542 net basic cable subscribers during the latest quarter, and softer-than-anticipated high-speed Internet access and digital TV subscriber growth.
From Playback Daily