Source : Toronto Star

Alliance Atlantis shows called a stopgap if strike by writers prolonged; firm reports profit drop

Canadian Press

Stockpiled programs will help tide Global and its sister TV stations over as they face the writers' strike in Hollywood and prepare for any impact it, and a potential U.S. recession, could have on advertising revenues, says the CEO of CanWest Global Communications Corp.

"There's plenty of programming around now, the start of the spring season. So January, February and March we don't think it will have much of an effect," said Leonard Asper in an interview yesterday, after the company, which owns Global, reported first-quarter earnings.

"I think in April, May and June we'll have to start thinking of other programming strategies."

Fears have encircled the entertainment industry over whether viewers will abandon TV viewing because most shows aren't airing new episodes due to a strike by the Writers Guild of America, now in its 10th week.

That ultimately could bite into the bottom line as advertisers may scuffle away from TV and into other media formats. Coupled with a potential U.S. recession, that could mean scaled-back advertising budgets for many companies, which is ultimately bad news for broadcasters.

"It's very much on our minds," Asper said.

"What's good about the media business (is) it's often a laggard when recessions or slowdowns come because a lot of the advertising is booked for year-long commitments in advance. We're the last ones to see the pain."

"We're managing our expenses in case it does come," he added.

Asper outlined a long line of new reality programs on the slate which still can be produced because they do not fall under writers' guild regulations.

Global will keep airing such new U.S. shows as Celebrity Apprentice, Survivor and Big Brother.

Asper said the network has talked about bringing back the Canadian versions of Are You Smarter Than a 5th Grader? and Deal or No Deal. Both were ratings powerhouses.

"There will be some cost savings because we won't be running the big budget U.S. programs," he added.

Yesterday, Winnipeg-based CanWest, which owns numerous specialty TV channels as well as Global and a chain of big-city newspapers in Canada, including the National Post, reported earnings fell more than a third to $41 million, or 23 cents a share, for the three months ended Nov. 30, down from $66 million, or 37 cents a share, a year earlier, while quarterly revenues of $868 million rose 8 per cent from $805 million.

Five analysts had estimated, on average, that CanWest would earn 31 cents a share, according to Thomson Financial.

The quarter ended before the Canadian Radio-television and Telecommunications Commission conditionally approved CanWest's controversial $2.3 billion takeover of Alliance Atlantis Communications Inc. on Dec. 20.

A final decision on the deal, a partnership between CanWest and New York investment firm Goldman Sachs, is expected by the end of this week, Asper said.

The Alliance Atlantis segment has been renamed CW Media, which contributed most of the revenue growth in CanWest's domestic TV business during the quarter.

Asper suggested the Alliance Atlantis buy could be especially lucrative if the writers strike for months "because we'll be able to draw on their inventory of programming, from the cable channels."

CanWest shares closed at $6.79, up 20 cents, in Toronto.

© Toronto Star