Astral Media takes hit

One of Canada’s largest media companies with radio, television and outdoor advertising in every major market across the country, is now showing signs of weakness due to the economic downturn.

Montreal-based Astral Media Inc. posted a fourth-quarter loss of $273.6 million or $4.87 per share for the period ended Aug.31. This is a dramatic change from one year ago when the company’s shares were up by 68 cents, earning nearly $39 million.

Astral Media spokesman Hugues Mousseau believes one reason is due to the loss of a business week in the fiscal year, which he says accounted for another 6 per cent in advertising revenue for 2008.

“Our revenues in the fourth quarter of fiscal 2009, which declined by 5 per cent compared to the same quarter last year, were impacted artificially by a difference in the number of weeks,” he said. “While our advertising revenues declined slightly in the year, our subscriber revenues showed strong growth throughout the year.”

Tim Casey, a BMO Capital Markets analyst, says that Astral’s fourth-quarter results show that Quebec’s advertising market is now feeling the impact of the economy, but the media company’s holdings in other parts of Canada helps balance the books overall.   

“Their geographic exposure is probably a positive relative to other companies,” he said. 

In 2005, Astral Media acquired Standard Radio, which brought their presence into 45 markets across Canada. According to Mousseau, this gives Astral the stability needed to withstand the current economic trouble.

“Astral Media enjoys a very balanced revenue and geographic mix, in terms of the split between our advertising revenues and our subscriber-based revenues, which tend to be less seasonal, less influenced by economic cycles,” he said.

The company’s media assets, including 83 radio stations in Canada, and projected outlook give the idea Astral will bounce back quickly in the next quarter.

“I think most people believe that we’ve hit bottom, that it’s not going to get any worse, and I would say expectations are for a slower and more gradual recovery,” Casey said.

But Mousseau believes that by mid-next year his company will be back on course and in a favourable position to benefit from a recovering economy and advertising market.

“The first two quarters of the year are going to be in a slowly recovering economy and hoping to enter into a more robust growth period into the second half of fiscal 2010.”