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Q3 2008 ASTRAL MEDIA INC Earnings Conference Call - Final.

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Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good morning ladies and gentlemen welcome to Astral Media's fiscal 2008 third-quarter financial results conference call. At this time all participants are in a listen-only mode. I would like to remind you that after the presentation the analysts will be invited to ask questions first, followed by the members of the media. Instructions will be provided at that time for you to queue up for questions.

I would like to remind everyone that this conference call is being recorded today Thursday July 10, 2008 at 10:30 AM Eastern time. (OPERATOR INSTRUCTIONS). It is now my pleasure to introduce Mr. Andre Bureau, Chairman of the Board of Astral Media. Please go ahead, sir.

ANDRE BUREAU, CHAIRMAN OF THE BOARD, ASTRAL MEDIA INC.: Good morning everyone (spoken in French) I am a Andre Bureau, Chairman of the Board of Astra Media and I am joined this morning by Ian Greenburg, President and Chief Executive Officer; Claude Gagnon, Senior Vice President and Chief Financial Officer; Alain Bergeron, Vice President of Brand Management and Corporate Communications; Robert Fortier, Vice President, Controller; and Jacques Parisien, Group President, Astral Media Radio and Astral Media Outdoor. He is also joining us by telephone.

On behalf of all of us here in Montreal, I would like to welcome you to this third-quarter conference call for fiscal 2008. And during the course of this call, Ian and Claude will give you an overview of the results after which we will proceed with a question-and-answer period. As usual we will take questions from analysts first followed by questions from the media. (spoken in French)

IAN GREENBERG, PRESIDENT, CEO, ASTRAL MEDIA INC.: (spoken in french) Good morning everyone and thank you for joining us. I'm delighted to report another very solid quarter for the Company as we grew organically as has been the case for several years now. And our acquisitions as well as our investments in the Toronto street furniture project are also yielding solid benefits for the Company.

As you have read in the press release issued earlier this morning, revenues for the quarter increased by 38% to C$233 million. EBITDA grew to C$82.2 million, a 41% increase over the same quarter last year. Net earnings for the quarter rose to C$43.3 million, a 21% increase over last year's results and basic earnings per share increased 12% over the same period last year rising to C$0.76 per share. Now we will take a brief look at each of our divisions.

In specialty television, the momentum we saw in the first half of the year continued as revenues for the quarter increased by 11% fueled by a 14% rise in advertising sales. In paid television, our subscriber numbers held firm in the quarter despite the prolonged attention that (inaudible) are directing towards building their digital customer bases and growing other core segments as well as other unusual factors affecting the business such as the Writer's Guild strike.

We remain confident that the growth potential for pay TV remains strong. The continuing rollout of digital platform enhances the market for pay TV. Furthermore, our fall lineup of programming is almost certainly our strongest ever and will help attract new subscribers. It features an unprecedented nine new or returning series including Entourage 5, Dexter 3, Californication 3, [Brother] 3 as well as several blockbuster movies.

Now turning to radio, the assets acquired from Standard Radio recorded revenues of C$56.1 million growing slightly in excess of 2% over the same quarter last year and an EBITDA of C$22.6 million for the quarter representing an excellent EBITDA margin of 41.2%. Both revenues and EBITDA were in line with our current expectations which are generally linked to the market performance.

Astral's legacy radio stations in Quebec and the Atlantic provinces recorded a 7% revenue decline for the quarter. This is largely explained by the challenging markets in the province of Quebec which contracted by 3% in the quarter. In addition, sales of the energy network mainly in the Montreal market were weaker due to lower ratings obtained in the S4 2007 BBM survey. This is largely attributable to the departure of (inaudible) on-air personalities who animated the highest rated show in the country. Our management has been addressing the situation and indications are that the rest of our radio stations both in Quebec and across the rest of country will be in line with their respective markets in the fourth quarter.

(inaudible) this was an excellent quarter for our outdoor division which saw its revenues increase by 39% reaching C$17.5 million. This is mainly attributable to the contribution of the Toronto street furniture program and another strong performance in the Quebec market. The rollout of our new street furniture structures began as planned in Toronto this month.

In summary, we're very pleased with the results in Q3 and look forward to the quarters ahead with confidence in the strength of our national geographic footprint and in the capacity of our core businesses to continue to deliver growth. I will now ask Claude Gagnon to give you a brief overview of other relevant financial information for the quarter.

CLAUDE GAGNON, SVP, CFO, ASTRAL MEDIA INC.: I just want to touch upon a couple of items. First of all piggybacking on Ian's comment with regards to the Standard Radio assets that we required and the increase of 2% over the performance of last year, I just want to take some of the mystery out of that in certain cases. We have noticed that a couple of the estimates that were out there were on the high side. So I just want to make sure that the numbers are clear.

Last year's equivalent quarter, quarter three for Standard, they produced revenues of around C$55 million. The equivalent number in Q4 fiscal 2007 for Standard is C$51 million. We're not shy to say that. The number is pretty much public. If you go to our business acquisition report that was published last January, Standard's number for last year overall was about C$207 million. So again, out of the C$207 million in fiscal '07, C$55 million was in Q3 and C$51 million was in Q4 and that is the basis that we're starting from.

Second item is with regards to part two fees and the recent court decision regarding the part two fees. As you know and...