CanWest MediaWorks Income Fund Reports Solid Q2 Revenue Growth

CanWest MediaWorks Income Fund Reports Solid Q2 Revenue Growth

TORONTO, April 5 /PRNewswire-FirstCall/ -- CanWest MediaWorks Income Fund (the "Fund") today announced financial results for CanWest MediaWorks Limited Partnership (the "Partnership") for the second quarter and six months ended February 28, 2006.

Revenue for the second quarter was $279 million, an $11.8 million or 4% increase over the same period last year. The revenue increase was attributable to gains in ROP advertising at the metropolitan daily newspapers, the impact of new products, Dose and Metro, and the continued expansion of online advertising. ROP advertising was particularly strong in the national category, which offset some weakness in classifieds. On a combined print and online basis, classifieds showed a slight increase in the quarter. Retail revenue showed modest growth in the quarter. Interactive revenue increased $1.4 million or 22% compared to prior year with strong gains in FPInfomart and general advertising on canada.com. Inserts continued to demonstrate good growth with year-over-year gains in the quarter of 4%. Circulation revenue increased slightly with price increases more than offsetting a slight decline in number of copies sold.

EBITDA(1) for the second quarter was $52.3 million compared to $58.2 million for the same period last year. The EBITDA decline was impacted by severance costs in the quarter related to the implementation of cost containment initiatives and start-up losses associated with Dose and Metro. Severance costs in the quarter totaled $5.8 million compared to $0.5 million in the same period last year. Adjusting for severance costs and Dose and Metro start-up losses, EBITDA for the second quarter was $61.4 million representing an increase of 1% compared to $60.8 million for the same period last year after comparable adjustments including the add-back of the Ravelston Management contract.

Distributable cash for the quarter was $39.0 million or $0.18 per unit. Cash distributions for the quarter totaled $0.25 per unit. As we have noted previously, due to the seasonal nature of newspaper advertising revenue, we expect distributions declared to exceed distributable cash in the second and fourth quarters and the shortfall will be offset by higher distributable cash generated in the first and third quarters. For the period October 13, 2005 to February 28, 2006 distributions declared were 93% of distributable cash. Net earnings in the quarter were $36.7 million compared to $5.0 million in the same quarter last year. The increase in net 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 delivered another strong quarter of revenue gains thanks to the success of our newspapers in Western Canada, where the economy continues to pace well ahead of the rest of the country. During the quarter, we implemented a number of cost containment initiatives, which we believe will position us to deliver year-over-year EBITDA growth in fiscal 2006. We are also pleased with our performance to date in generating distributable cash in excess of unitholder distribution requirements."

Six Months Ended February 28, 2006

For the six-month period, revenues totaled $593.1 million, representing a $26.4 million or 5% increase over the same period last year. Revenue growth for the first half of the year was largely driven by increases in retail and national ROP advertising, inserts, and strong growth in Interactive revenues. Revenue growth is more heavily weighted, on a same-store basis, to the Western Canadian metropolitan daily newspapers.

EBITDA for the six-months of fiscal 2006 was $134.6 million compared to $145.6 million for the same period last year. EBITDA declines are attributable to severance charges and start-up losses at new publications, Dose and Metro. Distributable cash for the period October 13, 2005 to February 28, 2006 was $86 million or $0.40 per unit. Distributions declared for the period October 13, 2005 to February 28, 2006 totaled $0.37 per unit. For the six months ended February 28, 2006, net earnings were $67.5 million compared to $25.8 million in the same period last year. The increase in net earnings primarily reflects lower taxes due to the change in corporate structure to a Limited Partnership and lower financing costs.

Commenting on the outlook for the rest of the year, Peter Viner, President and Chief Executive Officer, said "Our outlook for the remainder of the year is positive. We expect continued revenue growth in retail and national ROP, inserts, and online classifieds. Print classifieds will continue to be a challenge, but our integrated print and online strategy is helping to mitigate softness in this category. We expect to see the full impact of cost containment initiatives implemented this quarter in the second half of the year and, supported by attractive newsprint pricing arrangements and fixed interest rate costs, the Fund is positioned for growth in distributable cash."

Basis of Presentation

The Publications Group, formerly owned by CanWest MediaWorks Inc., 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 February 28, 2006. The comparative period for the six months ended of fiscal 2005 covers the combined consolidated financial results of the Publications Group.

About CanWest MediaWorks Income Fund and CanWest MediaWorks Limited
Partnership

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.

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

Three months ended February 28,
-------------------------------
2006 2005

Publications Group

(for comparative
purposes only)

Revenue
Newspapers 272,534 261,939
Interactive 7,808 6,426
Intersegment revenue elimination (865) (660)
-------- --------
Total revenue 279,477 267,705

Segment Operating Expenses
Newspapers 220,430 200,588
Interactive 6,234 4,924
Intersegment revenue elimination (865) (660)
-------- --------
225,799 204,852
Segment Operating Profit
Newspapers 52,104 61,351
Interactive 1,574 1,502
-------- --------
53,678 62,853
CanWest corporate costs(2) 1,342 2,878
Ravelston Management contract expense - 1,781
-------- --------
EBITDA(1) 52,336 58,194
-------- --------
-------- --------

Six months ended February 28,
------------------------------------------------
September 1 - October 13 - Total
October 12 February 28 2006 2005

Publications Publications
Group Group

(for (for
comparative comparative
purposes purposes
only) only)

Revenue
Newspapers 135,835 443,787 579,622 556,054
Interactive 3,275 11,855 15,130 12,089
Intersegment revenue
elimination (391) (1,302) (1,693) (1,484)
-------- -------- -------- --------
Total revenue 138,719 454,340 593,059 566,659

Segment Operating Expenses
Newspapers 104,007 340,285 444,292 403,890
Interactive 2,950 9,628 12,578 9,797
Intersegment revenue
elimination (391) (1,302) (1,693) (1,484)
-------- -------- -------- --------
106,566 348,611 455,177 412,203
Segment Operating Profit
Newspapers 31,828 103,502 135,330 152,164
Interactive 325 2,227 2,552 2,292
-------- -------- -------- --------
32,153 105,729 137,882 154,456
CanWest corporate costs(2) 1,201 2,071 3,272 5,286
Ravelston Management
contract expense - - - 3,562
-------- -------- -------- --------
EBITDA(1) 30,952 103,658 134,610 145,608
-------- -------- -------- --------
-------- -------- -------- --------

(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)

Three months ended February 28,
-------------------------------
2006 2005

Publications Group

(for comparative
purposes only)

Revenue 279,477 267,705
Operating expenses 227,141 209,511
-------- --------
EBITDA 52,336 58,194
Amortization of property,
plant and equipment 12,928 11,676
Other amortization 173 36
-------- --------
Operating income 39,235 46,482
Interest expense (10,732) (38,436)
Amortization of deferred financing charges (417) -
Foreign currency exchange gains (losses) (58) (224)
Other income 986 -
Gain on disposal of property,
plant and equipment - -
-------- --------
Earnings before taxes 29,014 7,822
Current tax provision (recovery) (56) 4,713
Future tax provision (recovery) (7,649) (1,870)
-------- --------
Net earnings (loss) for the period 36,719 4,979
-------- --------
-------- --------

Six months ended February 28,
------------------------------------------------
September 1 - October 13 - Total
October 12 February 28 2006 2005

Publications Publications
Group Group

(for (for
comparative comparative
purposes purposes
only) only)

Revenue 138,719 454,340 593,059 566,659
Operating expenses 107,767 350,682 458,449 421,051
-------- -------- -------- --------
EBITDA 30,952 103,658 134,610 145,608
Amortization of property,
plant and equipment 5,422 19,585 25,007 22,204
Other amortization 84 262 346 72
-------- -------- -------- --------
Operating income 25,446 83,811 109,257 123,332
Interest expense (33,858) (16,604) (50,462) (84,312)
Amortization of deferred
financing charges - (634) (634) -
Foreign currency
exchange gains (losses) (217) 148 (69) 614
Other income - 1,523 1,523 -
Gain on disposal of
property, plant
and equipment 328 - 328 -
-------- -------- -------- --------
Earnings before taxes (8,301) 68,244 59,943 39,634
Current tax
provision (recovery) (1,452) 118 (1,334) 16,386
Future tax
provision (recovery) (2,849) (3,337) (6,186) (2,596)
-------- -------- -------- --------
Net earnings (loss)
for the period (4,000) 71,463 67,463 25,844
-------- -------- -------- --------
-------- -------- -------- --------

Schedule of Distributable Cash
(in thousands of Canadian dollars)

For the period
For the three from October 13,
months ended 2005 to
February 28, 2006 February 28, 2006

EBITDA(1) 52,336 103,658

Management believes that the
following adjustments are required
to determine distributable cash:

Add:
Dose and Metro losses to be
funded through a reserve(2) 3,204 5,043
Capital recovery from CanWest(3) 986 1,523
Performance unit plan expenses(4) 286 393

Deduct:
Priority distribution
for Fund expenses(5) (110) (154)
Maintenance capital expenditures(6) (6,968) (7,831)
Interest(7) (10,732) (16,604)
-------- --------
Distributable cash for the period 39,002 86,028
-------- --------
-------- --------
Distributable cash per unit $0.1829 $0.4034

(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 six months ended
February 28, 2006. 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 $7.0 million
for the three months ended February 28, 2006 and $7.8 million for the
period from October 13, 2005 to February 28, 2006. 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 MediaWorks Income Fund

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

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