More details, press release on the numbers:
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Metromedia International GroupReports 1997 Results; Combined Joint Ventures Generate 164% SubscriberGrowth and 352% EBITDA Growth
March 31, 1998 02:22 PM
EAST RUTHERFORD, N.J.--(BUSINESS WIRE)--March 31, 1998--Metromedia International Group , through its Communications Group, is the owner of various interests in joint ventures that are currently in operation or planning to commence operations in Eastern Europe, the republics of the former Soviet Union, China, and other selected emerging markets. Combined financial results of these joint ventures for the years ended December 31, 1997 and 1996 are summarized below.
Combined Financial Results of Joint Ventures
(Eastern Europe, the republics of the former
Soviet Union, China, and other selected emerging markets)
$ in Thousands
Years Ended December 31,
--------------------------------------
1997 1996 Change
--------------------------------------
Number of Joint Ventures 48 35 37%
Subscribers(a) 318,826 120,596 164%
Revenues $ 91,207 $ 57,213 59%
EBITDA(b) $ 18,221 $ 4,035 352%
Depreciation and amortization $ 17,804 $ 8,976 98%
Operating income
(loss) before taxes $ 417 $ (4,941) --
Capital expenditures(c) $ 66,411 $ 14,268 365%
Equity in income (losses) $ (13,221) $ (11,079) 19%
(a) Includes China's Ningbo City GSM Subscribers
(b) Operating income (loss) plus depreciation and amortization
(c) MITI capital expenditures only
Metromedia International Group's (MMG) joint ventures continue to experience rapid growth with aggregate subscribers to their various services of 318,826 for the year ended December 31, 1997, representing a growth of 164% versus the previous year. Total combined revenues reported by consolidated and unconsolidated joint ventures in which MMG had an investment for the year ended December 31, 1997 were $91.2 million, up 59% versus 1996. MMG also announced a loss from continuing operations attributable to common stockholders in 1997 of $2.02 per share. The Company's consolidated statement of operations and balance sheet, and the computation of earnings per share, are set forth in attachments to this release.
John W. Kluge, MMG's Chairman said: "Our strong growth in joint ventures, subscribers, revenues, EBITDA, and operating income proves that Metromedia International Group is seizing the next great international opportunity--250 million people lacking adequate communications capabilities." Stuart Subotnick, MMG's President and Chief Executive Officer said: "Metromedia International Group's results reinforce that we have the right personnel and state-of-the-art technologies to provide the desired high-quality communications services at an affordable cost. Our business continues to grow in line with our expectations."
Review of Combined Financial Results of Joint Ventures
In reviewing the Combined Financial Results of Joint Ventures, Stuart Subotnick said: "We believe that our results in 1997 reflect very well on the strategies that we implemented in 1996. We anticipate that these strategies will continue to bear fruit for many years to come."
MMG's Communications Group is comprised of Metromedia International Telecommunications, Inc. (MITI), and Metromedia China Corporation (MCC)--formerly known as Metromedia Asia Corporation.
Total 1997 revenues for the Communications Group's cable television, paging, radio broadcasting, cellular telecommunications, international toll calling, fixed telephony, and trunked mobile radio businesses were up 59% to $91.2 million from $57.2 million in 1996. Combined operating income for all of the Communication Groups businesses were $417,000, compared with a loss in 1996 of $4.9 million.
Cable television revenues were up 53% to $23.3 million from $15.2 million in 1996. Total subscribers increased 226% to 225,525 from 69,118 in 1996. Combined operating losses for cable television were $6.8 million, compared to $6.0 million in 1996. Included in operating losses in 1997 were depreciation and amortization charges of $9.6 million, compared to $6.0 million in 1996. Subscriber growth and revenue increases were the result of implementing a new strategy, by which buildings were wired in advance and targeted for a lower priced, broader based program package. This strategy was originally implemented in Riga, Latvia and Tashkent, Uzbekistan, and in 1997, this strategy was expanded to all cable ventures. This strategy expansion coupled with acquisitions of systems in Romania and Moldova contributed to the subscriber growth and revenues increases at the operations in Tashkent, Uzbekistan, Kishinev, Moldova and Almaty, Kazakstan, each of which had revenue increases of $1.5 million, $1.2 million and $1.4 million, respectively. The increases in operating results reflect the favorable relationship between certain fixed operating costs and the increase in subscribers, combined with costs savings achieved through economies of scale resulting in contract re-negotiation with programmers and other suppliers.
Paging revenues were up 20% to $13.0 million from $10.9 million in 1996. Total subscribers increased 29% to 57,831 from 44,836 in 1996. Combined operating losses for paging were $3.9 million, compared to $943,000 in 1996. Included in operating losses in 1997 and 1996 were depreciation and amortization charges of $1.6 million. Increased paging revenue of approximately $738,000 and $635,000 achieved at paging operations in Nizhny Novgorod, Russia and Tashkent, Uzbekistan, respectively, were primarily attributable for the overall growth. Increases in the operating income for existing paging Joint Ventures in 1997 were offset by the operating losses of $2.9 million for the start up of the Austrian paging operations.
Radio broadcasting revenues were up 47% to $16.0 million from $10.9 million in 1996. Combined operating income for radio broadcasting was $4.2 million, compared to $279,000 in 1996. Included in operating income in 1997 were depreciation and amortization charges of $699,000, compared to $257,000 in 1996. The revenue growth is due to increases in the number of advertising spots purchased and increases in the price of the advertising spots. The ability to sell increased spots at a higher rate is dependent on audience ratings. The Company has increased its audience share through the use of market research to determine programming formats and marketing strategies including employing United States trained sales managers. Specifically, during 1997 this business strategy resulted in revenue increases of $2.0 million and $1.1 million for radio operations in Moscow, Russia and St. Petersburg, Russia, respectively. In addition, the acquisition during 1997 of a four station radio group in Estonia contributed approximately $744,000 to the revenue increase. The steady increase in operating income from 1996 to 1997 is a result of the increases in revenue growth and is reflective of the Company's philosophy to continually develop existing audience share and revenue base offset by the effects of start-up costs associated with new stations acquired in both 1996 and 1997.
International toll calling revenues were up 61% to $30.9 million from $19.2 million in 1996. The Company commenced its trunked mobile radio operations in 1996 and revenues in 1997 were up 289% to $4.0 million from $1.0 million in 1996. Cellular telecommunications operations commenced in 1997 and had revenues of $4.0 million. Operating income from international toll calling operations was $17.2 million, compared to $3.1 million in 1996. Trunked mobile radio operating losses were $3.3 million, compared to $1.4 million in 1996, and operating losses for cellular telecommunications in 1997 were $6.7 million. The increase in international toll calling revenue is directly attributable to increases in both the incoming and outgoing minute stream at the Joint Venture in Tblisi, Georgia, which handles all international calls inbound to and outbound from the Republic of Georgia. Increased trunked mobile radio revenue was primarily due to an increase of approximately $2.5 million realized at the Portugal operations.
In 1997, MMG sold its Entertainment Group and anticipates completing the sale of its Landmark Theatre Group in April 1998. These sales make MMG almost entirely a pure-play provider of communications services in emerging markets. Commenting on Snapper, MMG's manufacturer of lawn and garden equipment, Stuart Subotnick said: "Snapper posted strong revenue growth of 19.5% in 1997, and we continue to implement necessary organizational an operations improvements that we anticipate will help maximize Snapper's value in the future."
As a number of the Company's Communications Group's joint ventures are in the early stages of development, the Company expects this group to generate significant operating and net losses as it continues to build out and market its services. Management believes that its goals will be achieved through a combination of the Company's successful implementation and execution of its growth strategy and the Company's joint ventures achieving positive operating results and cash flows through revenue and subscriber growth and control of operating expenses.
Metromedia International Group, Inc. is largely a provider of communications services in emerging markets. Through its Communications Group, the Company is the owner of various interests in joint ventures that are currently in operation or planning to commence operations in Eastern Europe, the republics of the former Soviet Union, China, and other selected emerging markets. The communications services are Cable Television; Paging; AM/FM Radio; and Telephony, which includes Cellular Telecommunications, International Toll Calling, Fixed Telephony, and Trunked Mobile Radio.
This partial discussion of the statements of financial condition and operations of the Company should be read in conjunction with the consolidated financial statements and related notes contained in the Company's Form 10-K for the fiscal year ended December 31,1997, as filed with the U.S. Securities and Exchange Commission.
This news release contains certain forward-looking statements that involve risks and uncertainties. Factors that could cause or contribute to such risks and uncertainties include, but are not limited to, general economic and business conditions, competition, changes in technology and methods of marketing, and various other factors beyond the Company's control. This also includes such factors as described from time to time in the U.S. Securities and Exchange Commission reports filed by Metromedia International Group, including the 1997 Form 10-K. |
