Canwest Reports 39 Percent Profit Increase for Year (Part 2 of 2).

WINNIPEG, Manitoba--(BUSINESS WIRE)--Nov. 13, 1997--CanWest Global Communications (TSE:CGS.S.) (TSE:CGS.A.) (NYSE:CWG)

BACKGROUND INFORMATION TO CANWEST GLOBAL'S YEAR END REPORT, 1997 RESULTS OF OPERATIONS

The following discussion focuses upon financial results that have been prepared on a combined basis and are reported in Canadian dollars.

"Under Canadian GAAP, we are required to equity account our economic interest in Network TEN," said John Maguire, Vice-President, Finance and CFO. "We believe that by providing our shareholders with full financial disclosure, on a supplementary basis, of Network TEN's results proportionately consolidated into our financial statements, we more clearly reflect the true magnitude of our Company's broadcast operations."

It is important to note that earnings and earnings per share on a combined basis are the same as earnings and earnings per share reported on a Canadian GAAP basis.

The results being reported today reflect strong revenue growth at each of the Canadian operations and Network TEN in Australia, along with the increased economic interests in both Network TEN and TV3.

On October 31, CanWest entered into an agreement to acquire Westpac Banking Corporation's interest in TV3, effective April 1, 1997. Because payment of the purchase price, due September 1, 1997, was established at a fixed amount and had been secured by a letter of credit, generally accepted accounting rules in Canada required consolidation of TV3 results from the date of the agreement. Consolidation of the TV3 results has provided the opportunity for the Company to correct an historical two-month lag in the recording of the results of TV3. Historically, CanWest had recorded its share of TV3 results based upon TV3's reporting of its quarterly results. Accordingly, these results include the Company's share of TV3's results for an additional two months in fiscal 1997.

During the first quarter of fiscal 1997, CanWest financed the acquisition by an unrelated Australian company, of approximately 17 percent of the issued and outstanding shares of Network TEN (representing an approximate 8.5 percent economic interest in TEN). This transaction effectively increased CanWest's economic interest in Network TEN to approximately 66 percent. Further expansion, during the second quarter, of our financing activities in Australia, increased the Company's interest in Network TEN to approximately 76 percent.

YEAR ENDED AUGUST 31, 1997

Combined revenue for the year was $835,118,000 compared to $628,018,000 for 1996. This represented a 33.0 percent gain, reflecting strong performances in all sectors of the Company's broadcast operations.

- In Canada, revenue from the Global Television Network for fiscal 1997 rose to $365,312,000, a 12.3 percent increase over the $325,197,000 reported last year. This revenue growth was attributable to the continued strength of Global's program schedule throughout the country and general improvement in advertising demand.

- In Australia, Network TEN reported strong gains in revenue for fiscal 1997. TEN's contribution to the Company's revenue for the year increased $115,324,000 or 44.5 percent to $374,732,000 from $259,408,000 reported in fiscal 1996. The increase in the Company's economic interest in TEN during 1997 accounts for $69,286,000, or 60 percent of the increased contribution. Results in 1997 also reflect a full 12 months for the Perth and Adelaide stations versus 10 months in fiscal 1996. On a same station basis, Network TEN's airtime revenue before conversion to Canadian dollars was up approximately 14.2 percent over last year. The results also include foreign exchange gains as Network TEN results have been converted at an average rate of $1.0632 this year, compared to $1.0451 last year.

- In New Zealand, revenue comprises 100 percent of TV3's results effective November 1, 1996, as well as the inclusion of the Company's share of TV3's results for an additional two months in the first quarter; two months operations of TV4, which went on air in June 1997; and one months contribution from More FM, acquired on July 31, 1997. New Zealand's contribution to CanWest's revenue was up 119 percent for the year, rising to $95,074,000 compared to $43,413,000 reported a year ago. On a comparable basis, TV3's revenues were up 3.2 percent over the previous year, reflecting continued gains in audience share and an increased share of revenue in a soft advertising market. New Zealand results have been converted at an average rate of $0.9422 compared to $0.9153 last year.

Combined operating profit before amortization and corporate and development costs (broadcast operating profit) for the year rose 33.1 percent to $290,547,000 from the $218,367,000 reported in the prior year. Broadcast operating profit growth across the company's operations reflected the revenue increases noted above, coupled with controlled increases in operating cost expenses.

- In Canada, broadcast operating profit totaled $139,887,000 for fiscal 1997, a 23.7 percent increase over last year's total of $113,130,000. This increase stemmed directly from revenue growth combined with tight control on operating costs.

- In Australia, Network TEN's contribution to CanWest's broadcast operating profit was up 37.2 percent to $125,111,000 for the year. This compared with $91,158,000 for 1996. CanWest's increased economic interest in Network TEN accounted for $21,840,000 or 64 percent of the increased contribution. A full year's contribution from the Perth and Adelaide stations and foreign exchange also positively impacted broadcast operating profit. TEN's reported broadcast operating profit was up approximately 11.0 percent over the prior year.

- In New Zealand, the broadcast operating profit contribution increased by 81.5 percent to $25,549,000 from $14,079,000 reported last year. This increase reflected the full consolidation of TV3 results as well as inclusion of results for an additional two months in the current year. On a same period basis, TV3's broadcast operating profit for the year was comparable with the previous year. Combined operating profit before amortization, but after corporate development expenses (EBITDA), rose 33.0 percent to $274,331,000 for fiscal 1997, up from $206,318,000 in fiscal 1996. Corporate and development expenses in 1997 included costs related to the Company's unsuccessful applications for licences in Alberta and Victoria, British Columbia.

Earnings from continuing operations rose 34.4 percent to $141,862,000 in fiscal 1997 from $105,589,000 a year ago.

Cash flow from continuing operations rose 49.6 percent to $205,165,000 from $137,176,000 last year. Growth in cash flow reflects the increased profitability of the Company, and an increase in non-cash charges for amortization and deferred income taxes.

Earnings per share were $0.96 for the year compared to $0.75 per share last year. Cash flow per share was $1.38 in 1997 versus $0.98 per share last year. Per share results were affected by the dilution created by the issuance of 9 million non-voting shares in June 1996.

QUARTER ENDED AUGUST 31, 1997

Combined revenue for the quarter ended August 31, 1997 was up 44.3 percent to $203,149,000 from $140,767,000 reported in the fourth quarter of fiscal 1996. Each of the Company's segments contributed significant increases.

- In Canada, revenue from Canadian operations for the fourth quarter was up 14.0 percent to $71,285,000 from the $62,516,000 reported in the same period last year. This significant growth in a traditionally soft period reflects increased market share in an increasingly buoyant advertising market.

- In Australia, Network TEN's revenue strengthened in the fourth quarter. CanWest's share of Network TEN revenue was $106,082,000, a 58.9 percent increase over the 1996 fourth quarter total of $66,774,000. CanWest's increased economic stake in TEN accounted for 63 percent or $24,688,000 of this increase. Network TEN's reported revenue for the period was up approximately 21 percent over the prior year, reflecting increased advertising demand and the absence of competition from the Olympic Games held during this period in 1996.

- In New Zealand, TV3 contributed revenue of $23,098,000, up 101.3 percent from the $11,477,000 reported in the fourth quarter last year, reflecting CanWest's increased interest in TV3. The fourth quarter results also include revenue contributions of TV4 and More FM as described above.

Combined broadcast operating profit before amortization and corporate and development costs (broadcast operating profit) for the quarter ended August 31, 1997, rose 38.1 percent to $53,550,000 from the $38,783,000 reported last year. Broadcast operating profit growth across each of the Company's operations reflected strong revenue increases described above, as well as increased economic interests from Network TEN.

- In Canada, broadcast operating profit totaled $17,338,000 for the fourth quarter, a 33.2 percent increase over last year's total of $13,016,000. This increase was directly related to strong revenue growth throughout the CanWest Global System.

- In Australia, CanWest's share of Network TEN's broadcast operating profit rose to $32,180,000 for the fourth quarter of fiscal 1997, an increase of 43.1 percent over the 1996 total of $22,483,000. Of this increase, $7,610,000 can be attributed to CanWest's increased economic stake in Network TEN.

- In New Zealand, TV3's contribution to broadcast operating profit was $5,702,000 compared to $3,284,000 reported last year, reflecting the increased economic interest in TV3. The increase from TV3 coupled with a one month contribution from More FM was slightly offset by the start up of TV4 in June 1997, resulting in a total contribution to broadcast operating profit from New Zealand of $4,032,000.

Combined operating profit before amortization, but after corporate and development expenses (EBITDA), rose to $48,731,000 or 37.7 percent during the fourth quarter of fiscal 1997 from the $35,379,000 reported in fiscal 1996.

Earnings from continuing operations rose 6.3 percent to $24,543,000 in the fourth quarter from $23,098,000 in 1996.

Cash flow from continuing operations climbed 87.8 percent to $56,990,000 from $30,341,000 last year. Growth in cash flow reflected the Company's proportionate interest in deferred tax provisions from Network TEN, as determined for their fiscal year ending in June 1997.

Earnings per share in the fourth quarter were $0.17 in 1997 compared to $0.16 for the same period in 1996. Cash flow per share totaled $0.38 in 1997 compared to $0.21 per share last year.

RESULTS DETERMINED IN ACCORDANCE WITH U.S. GAAP

Net earnings determined in accordance with U.S. GAAP were $135,805,000 for the year ended August 31, 1997, compared to $100,050,000 in 1996. Primary and fully diluted earnings per share from continuing operations were $0.91 in the year compared to $0.71 in 1996.

Net earnings determined in accordance with U.S. GAAP were $24,543,000 for the three months ended August 31, 1997, compared to $17,771,000 in the fourth quarter of fiscal 1996. Primary and fully diluted earnings per share from continuing operations were $0.16 in the fourth quarter compared to $0.12 in 1996.

CONTACT: CanWest Global Communications Corp.

Peter D. Viner, 204/956-2025

or

John E. Maguire, 204/956-2025