CanWest MediaWorks Income Fund Reports Solid Q1 Revenue Gains

CanWest MediaWorks Income Fund Reports Solid Q1 Revenue Gains

TORONTO, Jan. 11 /PRNewswire-FirstCall/ -- CanWest MediaWorks Income Fund (the "Fund") announces financial results for the three months ended November 30, 2005, the first quarter of its 2006 fiscal year for the Publications Group formerly owned by CanWest MediaWorks Inc. The Publications Group was acquired by CanWest MediaWorks Limited Partnership (the "Limited Partnership"), in which, effective October 13, 2005, the Fund acquired an approximate 26% interest.

The financial statements released today include the presentation of combined consolidated financial performance of the Publications Group for the period from September 1, 2005 to October 12, 2005, the time pre-dating the formation of the Limited Partnership, and the consolidated financial results of the Limited Partnership for the period from October 13, 2005 to November 30, 2005. The comparative period presented covers the combined consolidated financial results of the Publications Group for the three months ended November 30, 2004, the first quarter of the 2005 fiscal year.

Revenue for the three months ended November 30, 2005 was $313.6 million, a $14.6 million or 5% increase over the same period last year. Newspaper advertising revenue increased 4% with growth spread evenly across all categories. Significant growth in online classifieds more than offset a slight decline in print classifieds. Circulation revenue increased slightly with price increases more than offsetting a slight decline in number of copies sold. Dose and Metro also contributed to growth in newspaper revenue. Interactive revenue increased $1.7 million or 29% compared to prior year due to continued growth in online advertising.

EBITDA(1) for the first quarter was $82.3 million compared to $87.4 million for the same period last year. The EBITDA decline is attributable mainly to losses associated with Dose and Metro, which are in a development stage, higher payroll and distribution costs and strategic investments made in launching new online properties. The aggregate net earnings were $30.7 million in the first quarter compared to $20.9 million in the same quarter last year. The increase in earnings primarily reflects lower taxes due to the change in corporate structure to a Limited Partnership and lower financing costs.

Commenting on the results, Peter Viner, President and Chief Executive Officer of the Limited Partnership said, "We are pleased with the revenue growth achieved in the quarter thanks to the strong performance of the retail, national, online and insert advertising categories. These results were due in part to the success of initiatives geared towards increasing the product offering to our existing advertiser base. The free publications, Dose and Metro, continue to build their readership to levels anticipated prior to launch. Our priority in the coming period is to improve the year-over-year EBITDA through a combination of cost containment initiatives and expected revenue growth."

For the period from October 13, 2005, the date of the initial public offering of the Fund, to November 30, 2005, total revenue for the Limited Partnership was $174.9 million and total EBITDA was $51.3 million. Distributable cash for this period was $47.0 million or $0.2205 per unit. Cash distributions for the period totaled $0.1234 per unit. The excess of distributable cash over distributions for this period is the result of a lower level of capital expenditures and due to the seasonal nature of newspaper advertising revenue, which is highest during the first quarter of the fiscal year. Based on the first quarter results and current outlook, the Fund expects to maintain regular distributions of $0.925 per unit on an annualized basis and achieve a ratio of distributions to distributable cash of no greater than 95% for fiscal 2006. The Fund's declaration of trust requires that it distribute all taxable income earned up to December 31, 2005. Accordingly, in addition to the regular cash distribution in the period of $0.1234 per unit, a special year-end distribution of $0.02 per unit will be paid on January 16, 2006 to unitholders of record on December 31, 2005.

Commenting on the quarter, Doug Lamb, Executive Vice President and Chief Financial Officer of the Limited Partnership said, "This was a very busy quarter for us, in addition to completing our initial public offering, we were able to complete fixed rate interest swaps covering 100% of our term credit facility, and negotiate very attractive newsprint pricing arrangements covering the full 2006 calendar year. These initiatives along with our solid revenue growth and focus on cost containment position the fund for future growth of distributable cash."

This news release contains certain comments or forward-looking statements that are based largely upon the Company's current expectations and are subject to certain risks, trends and uncertainties. These factors could cause actual future performance to vary materially from current expectations.

CanWest MediaWorks Income Fund (TSX: CWM.UN; www.cwmincomefund.com) is an unincorporated, open-ended trust that holds an approximate 26% equity interest in CanWest MediaWorks Limited Partnership, which is the largest publisher of newspapers in Canada, as measured by paid circulation, readership and revenue.

The assets within the Limited Partnership comprise ten major metropolitan daily newspapers serving nine Canadian cities; Vancouver Sun, The Province (Vancouver), Ottawa Citizen, The Gazette (Montreal), The Edmonton Journal, Calgary Herald, The Windsor Star, Times-Colonist (Victoria), Leader Post (Regina), Star Phoenix (Saskatoon), Dose, a wholly owned free commuter daily, and a one-third interest in Metro Ottawa and Metro Vancouver, free commuter dailies, together with 23 smaller community daily, weekly and bi-weekly publications. The assets also include online properties canada.com, working.com and driving.ca and related websites.

CANWEST MEDIAWORKS LIMITED PARTNERSHIP
Consolidated Segmented Results
(In thousands of Canadian dollars)

For the three months ended
November 30, 2005
------------------------------------
Sept.1- Oct.13-
Oct. 12 Nov.30 Total 2004
Publica- Publica-
tions tions
Group Group
(for (for
comparative comparative
purposes purposes
only) only)

Revenue
Newspapers 135,835 171,253 307,088 294,115
Interactive 3,275 4,047 7,322 5,663
Intersegment revenue
elimination (391) (437) (828) (824)
----------- ----------- ----------- -----------
Total revenue 138,719 174,863 313,582 298,954

Segment Operating
Expenses
Newspapers 104,007 119,855 223,862 203,302
Interactive 2,950 3,394 6,344 4,873
Intersegment revenue
elimination (391) (437) (828) (824)
----------- ----------- ----------- -----------
106,566 122,812 229,378 207,351

Segment Operating
Profit
Newspapers 31,828 51,398 83,226 90,813
Interactive 325 653 978 790
----------- ----------- ----------- -----------
32,153 52,051 84,204 91,603
CanWest corporate
costs(2) 1,201 729 1,930 2,408
Ravelston Management
contract expense - - - 1,781
----------- ----------- ----------- -----------
EBITDA(1) 30,952 51,322 82,274 87,414
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

(1) EBITDA is not an earnings measure recognized by GAAP and does not
have a standardized meaning prescribed by GAAP and may not be
comparable to measures presented by other issuers. EBITDA is equal to
net earnings adjusted to exclude amortization of property, plant and
equipment, other amortization, interest expense, foreign currency
exchange gains and losses, investment income and income taxes.

(2) For the periods prior to October 13, 2005 the corporate costs
represent the general costs of CanWest Global allocated to the
Publications Group. For periods subsequent to October 13, 2005 this
is equal to the charges made by CanWest to the Limited Partnership
for services provided under the Partnership Services Agreement.

Consolidated Statements of Earnings
(in thousands of Canadian dollars)

For the three months ended
November 30, 2005
------------------------------------
Sept.1- Oct.13-
Oct. 12 Nov.30 Total 2004
Publica- Publica-
tions tions
Group Group
(for (for
comparative comparative
purposes purposes
only) only)

Revenue 138,719 174,863 313,582 298,954
Operating expenses 107,767 123,541 231,308 211,540
----------- ----------- ----------- -----------
EBITDA 30,952 51,322 82,274 87,414
Amortization of property,
plant and equipment 5,422 6,657 12,079 10,528
Other amortization 84 89 173 36
----------- ----------- ----------- -----------
Operating income 25,446 44,576 70,022 76,850
Interest expense (33,858) (5,872) (39,730) (45,876)
Amortization of deferred
financing charges - (217) (217) -
Foreign currency
exchange gains (losses) (217) 206 (11) 838
Other income - 537 537 -
Gain on disposal of
property, plant and
equipment 328 - 328 -
----------- ----------- ----------- -----------
Earnings before taxes (8,301) 39,230 30,929 31,812
Current tax provision
(recovery) (1,452) 174 (1,278) 11,673
Future tax provision
(recovery) (2,849) 4,312 1,463 (726)
----------- ----------- ----------- -----------
Net earnings (loss)
for the period (4,000) 34,744 30,744 20,865
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Schedule of Distributable Cash

For the period
from October 13
to November 30,
2005
$000

EBITDA(1) 51,322
Management believes that the following adjustments are
required to determine distributable cash:
Add:
Dose and Metro losses to be funded through a reserve(2) 1,839
Capital recovery from CanWest(3) 537
Performance unit plan expenses(4) 107
Deduct:
Priority distribution for Fund expenses(5) (44)
Maintenance capital expenditures(6) (863)
Interest(7) (5,872)
---------
Distributable cash for the period 47,026
---------
---------
Distributable cash per unit $0.2205

(1) EBITDA is not an earnings measure recognized by GAAP and does not
have standardized meanings prescribed by GAAP. EBITDA may not be
comparable to similar measures presented by other issuers.
(2) Start-up losses incurred with respect to Dose and Metro have been
added back in calculating Distributable Cash because losses with
respect to those publications are intended to be funded through
available amounts reserved under the Revolving Bank Loan.
Specifically, $14 million of the Partnership's availability under the
Revolving Bank Loan has been reserved to fund losses related to Dose
and Metro and large corporations tax payments, which are expected to
end in 2008. The Partnership anticipates that approximately 90% of
the $14 million reserve will be used to fund future losses related to
Dose and Metro.
(3) The Partnership has made charges to CanWest and its affiliates
related to certain shared capital assets. This income is not included
in EBITDA of the Partnership. Management believes that it should be
added in computing distributable cash as it is cash available for
distributions.
(4) The Partnership has established a performance unit plan as an
incentive plan for its employees, trustees, directors and other
service providers. This plan is described in note 2 of the interim
consolidated financial statements for the three months ended
November 30, 2005. The operating expenses related to this plan are
non-cash; obligations under the plan will be fully satisfied through
the issuance of Fund Units and, accordingly, management believes that
this expense should be added back in computing distributable cash.
(5) The Partnership makes priority distributions to cover the costs of
the Fund. Management believes that these priority distributions
should be deducted in computing distributable cash.
(6) The Partnership's maintenance capital expenditures were $0.9 million
for the period from October 13 to November 30, 2005. Management
believes that capital expenditures required to maintain the capacity
of the operations should be deducted in computing distributable cash.
(7) The Partnerships financing expenses excluding non-cash amortization
of deferred financing charges have been deducted in computing
distributable cash.

Source: CanWest Media Works Income Fund

CONTACT: Doug Lamb, Executive Vice President and CFO,
CanWest MediaWorks Limited Partnership, Tel: (416) 383-2479, Email:
dlamb@canwest.com

-------
Profile: intent