CanWest beats forecasts by 90 per cent

CanWest MediaWorks' first full-year profit has beaten prospectus forecasts by nearly 90 per cent as rising ratings help TV3's owner to swallow the cost of launching Campbell Live.

The television and radio broadcaster reported an after-tax profit of $13.1 million, compared with a forecast $6.9 million.

Trading profit came in 6.7 per cent ahead of the prospectus forecast, meeting analysts' expectations at $67.8 million. It was also 11 per cent ahead of last year's trading profit of $60.9 million - one of the few comparative figures released by the company.

Analysts said the only disappointment was the 6.3c a share dividend for the year, including a final dividend of 2.3c, which dashed hopes for at least 7c.

"It was definitely low compared with people's expectations," said John Norling, an analyst with Alliance Capital Management.

CanWest chief executive Brent Impey said the television arm had enjoyed "spectacular" profit growth. TVWorks' trading profit rose 26 per cent to $36.6 million, on a 12 per cent increase in revenue to $142.4 million.

That was despite launching the 7pm current affairs show Campbell Live.

Impey was particularly pleased by the subsequent ratings success.

"The ratings of news was well above expectation. What we probably didn't factor in was the backflow from Campbell Live to the news."

The news lifted its target audience share 12 per cent in the final quarter of the financial year, against the same quarter the previous year. Campbell Live was drawing 25 per cent of the 18- to 49-year-old audience.

"That is just so significant for us."

Television earnings were also helped by the move of previously loss-making music channel C4 into the black.

The company's radio operation, RadioWorks, also shrugged off the $8.6 million capital cost of launching news and talkback station Radio Live nationwide. Impey said Radio Live had been profitable from its first month - where international precedents suggested it took months or years for stations to break even.

RadioWorks' trading profit rose 4.1 per cent to $33.8 million, with revenue up 6.3 per cent to $107.9 million.

MediaWorks has resolved talks with the Government over renewing its FM frequencies with the payment of $40 million in 2011. The company was depreciating the frequencies from a value of $38 million, so there would be a cash hit in that year.

Looking ahead, Impey said first-quarter trading profits would be hurt by plans to increase spending on local programming. But that cost would even out over the year and should not affect annual profit.

The advertising market has begun to slow, but Impey said improved audience ratings for TV3 and C4 should more than offset any softening in the television advertising market in the present quarter.

Investors still baulked at the outlook, sending MediaWorks shares 6c lower to close at $1.92 a share.