A REMARKABLE PERFORMANCE MADE POSSIBLE BY OUR 2,800 EMPLOYEES ACROSS CANADA
Heads of corporations usually conclude their annual message to shareholders with a few words thanking employees for their contribution to the organization’s performance.
However, this year, it’s more appropriate to begin our message by expressing our gratitude to Astral Media’s 2,800 employees and managers across Canada. Throughout some of the toughest economic challenges in our company’s history, our people have delivered a remarkable performance. We are particularly pleased to see that, despite a decline in the advertising market across the country, Astral Media emerged as one of the strongest media companies in Canada. Moreover, we continued to grow and established two financial milestones with revenues climbing 5% to a record $905.7 million; and EBITDA increasing 4% to $300.4 million.
We are very proud of these results, which could not have been achieved without the hard work and dedication of all the men and women who make Astral a leader in the industry.
While our 2009 performance owes much to the fine work accomplished during this fiscal year, this doesn’t tell the whole story. We were also well prepared to confront the recession. We viewed these challenging times not as a threat but as an opportunity to emerge as an even stronger and more agile organization.
Over the years, we have designed and implemented a solid, resilient business model, one that’s fully capable of meeting a serious market slowdown head-on. This business model is based first and foremost on quality programming for our audiences, complemented by a constant search for creative, innovative solutions for our advertisers throughout all of our platforms. It’s also based on having diverse revenue streams across pay and specialty television, radio and outdoor advertising. This healthy mix of advertising and subscription revenues has proven to be especially helpful when advertising spending undergoes a cyclical contraction like the one at present. And last but not least, our business model is based on discipline, rigorous management of cash flows and capital expenditures, and a strong balance sheet.
Our business model gives us flexibility and leaves us with options, regardless of economic conditions. For example, our ability to generate cash allowed us to reimburse $120 million of our bank debt in Fiscal 2009 and bring our net debt-to-EBITDA ratio down to a comfortable level of 2.2.
We were also prepared to confront the current economic slump because we started taking steps well over a year ago to further increase our efficiency and productivity. Some resulting measures involved fine-tuning our operating cost structure; others aimed to boost our revenue in various ways, particularly by identifying undeveloped cross-promotion initiatives across our brands as well as new cross-selling opportunities.
Our productivity and efficiency improvements have already delivered solid results. We have been able to enhance our processes and have continued to invest in the quality of our programming and in the solutions we offer to advertisers.
For example, during the 2009 fiscal year we laid new groundwork in a number of areas:
We launched TÉLÉTOON Rétro, offering a selection of classic 1960s and 1970s animated cartoons in French.
We launched HBO Canada, a The Movie Network multiplex channel that is redefining the standards for quality drama available to Canadian television audiences.
We continued to grow the Virgin Radio brand, which was expanded into the Vancouver, Ottawa and Montréal markets, following its launch in Toronto last year. The positive impact on audience ratings was immediate.
We launched our new digital outdoor advertising network in Montréal, the first digitally controlled billboard network of its kind in Canada. Subsequent to year-end, we expanded this state-of-the-art network with the addition of nine new faces in Vancouver and three faces in Toronto, providing us with a national network in Canada’s top three advertising markets. This network offers advertisers unique features that are redefining the way outdoor advertising is used. Advertisers get unprecedented flexibility in their outdoor displays which is helping us recruit a whole new category of customers.
Pursuant to an agreement with Le Groupe NRJ, the world’s largest private radio operator, we converted our Énergie network and its 10 stations in Québec to the NRJ brand. As the ultimate network in Europe, broadcasting artists from around the world, NRJ is a great source of exclusive content and exciting online experiences that help sharpen our competitive edge and attract new audiences.
What all these initiatives have in common is their creative and innovative character. Along with other measures, they are consolidating and expanding the platforms on which our growth depends. They are having an immediate impact on our results and promise to have long-lasting benefits.
Going forward, what has served us well up to this day will continue to prevail. We will remain disciplined and focused on execution to ensure our media properties remain must-buys in all of their respective markets. In anticipation of a gradual pick up in the advertising market, our prudent management and relentless focus on serving all our clients will clearly position us to fully benefit from an economic recovery.
It’s now up to our 2,800 employees across the country – some of whom you will meet in this online annual report – to once again meet the opportunities ahead. They have already met the challenge of resiliency. Now, they are fully ready to meet the challenge of recovery.
In closing, we would like to thank the members of our Board of Directors for their many contributions. In times like these, their wisdom and experience are more welcome than ever. We greatly appreciate their sound judgment and their commitment to Astral Media’s successes.