December 15, 2005 23:59 ET

COGECO reports revenue growth and increases its television investments

MONTREAL, Dec. 15 - COGECO Inc. reports an improvement in
its principal results over the previous year, particularly due to the strong
financial performance of its cable distribution subsidiary.

COGECO's revenue totalled $675.6 million, up 4.2% over the previous year,
due to a $27.9 million revenue increase from the cable sector, partly offset
by a slight $0.4 million decline in the media sector. Moreover, operating
income before amortization increased by 9% to $233.8 million, thanks to a
$24.3 million contribution from the cable sector, counterbalanced by a
$3.7 million decrease in the media sector. Excluding the television's
impairment of goodwill and other intangible assets for fiscal 2005, net income
would have been $9.8 million. However, this unusual item results in a net loss
of $19.8 million.

"COGECO's results, and especially those of its cable subsidiary, have
improved. More customers are now users of our high-speed Internet (HSI) and
digital services, and the launch of digital telephony allows the customers of
our cable subsidiary to benefit from a complete offer at a very attractive
price. As for our media subsidiary, the RYTHME FM network has continued to
build its base in its new markets, while maintaining its leading position in
the Montreal market. For TQS, very tight cost control at the beginning of the
year and substantial investments starting in the third quarter position us for
a return to profitability over the next few seasons," said Mr Louis Audet,
COGECO's President and Chief Executive Officer at the Company's annual

Media Sector

In 2005, the RYTHME FM network consolidated its position throughout
Quebec. Moreover, according to the BBM all through 2005, the Montreal radio
station 105.7 RYTHME FM continues to obtain good results and is establishing
itself as the leader among the 25-54 age group in the Montreal region.

93.3 in Quebec City is winning over its audience with programming suited
to the taste of its target audience, men between 25 and 54.

TQS is solidifying its programming base to regain its market shares and
strengthen its black sheep position. Shows such as Donnez au suivant, Le
Bachelor and Loft Story II will spearhead the achievement of the expected

Cable Sector

Cogeco Cable's revenue increased by $27.9 million, or 5.3% over the
previous year. The cable subsidiary's Operating Income rose by $24.3 million,
or 11.9%, thanks to revenue growth, counterbalanced by a modest increase in
operating expenses. Cash flow from operations was $26.2 million greater than
for the previous year, primarily due to the growth of Operating income and to
a decline in financial expenses. Operating margin rose from 38.6% for fiscal
2004 to 41% for fiscal 2005.

Fiscal 2005 allowed the cable subsidiary to increase customer acquisition
for digital services and HSI. This 22.5% improvement in clientele for digital
services and 15.9% for HSI eased the loss of 2,422 basic service customers.

During fiscal 2005, several enhancements were made to Cogeco Cable's
offer, such as the addition of many digital tiers and the expansion of high
definition and video-on-demand channels. On the other hand, the HSI service
remains the fastest on the market, and with the addition of F-Secure products,
provides value-added that is in keeping with our customers' demand. Cogeco
Cable intends to continue meeting its customers' expectations for leading-edge
technological goods and services. Thus, digital telephony will be extended to
most of our major markets by the end of fiscal 2006.

2006, a Promising Year

For the 2006 fiscal year, COGECO forecasts continued growth, although on
a more modest scale. The Company should improve its profitability and its net
cash flows, thus generating about $10 million in net income and $25 million to
$30 million in Free Cash Flow.

Cogeco Cable will work on consolidating its growth, both by increasing
and enhancing its product and service offerings and by acquiring new

On the radio side, 93.3 will continue to rely on its classic rock format,
which is greatly appreciated, based on the public's reaction. The RYTHME FM
network will consolidate its position, especially in the Montreal market.

TQS continues to display its commitment to innovation. The commented
television news and debates on current affairs have become its trademark. The
new programming will allow a return to profitability within the next few

"Fiscal 2006 looks very promising. We anticipate net earnings growth and
an increase in the return on shareholders' equity, despite the launch of
several promising new services. Sustained internal growth and approaches to
new clienteles, both in or outside Canada, will meet the Company's growth
objectives and search for value," Mr. Audet concluded.

About COGECO Inc.

COGECO is a diversified communications undertaking. Through its
subsidiary, Cogeco Cable, COGECO provides about 1,356,000 revenue-generating
units to about 1,449,000 cabled households within its service territory.
Through its two-way broadband cable infrastructure, Cogeco Cable provides its
residential and commercial customers with analog and digital video and audio
services, high-speed Internet services as well as a digital telephony service.
Through its subsidiary, Cogeco Radio-Television, COGECO owns 60% of the TQS
network, six TQS television stations and three CBC-affiliated television
stations, in partnership with CTV Television. Cogeco Radio-Television
operates, as sole owner, the RYTHME FM radio stations in Montreal, Quebec
City, Sherbrooke and Trois-Rivières as well as 93.3 in Quebec City. COGECO's
subordinate voting shares are listed on the Toronto Stock Exchange (CGO.SV).
The subordinate voting shares of its subsidiary Cogeco Cable are also listed
on the Toronto Stock Exchange (CCA.SV).

Contact Information

  • Media: Marie Carrier,
    Director, Corporate Communications,
    (514) 874-2600;

    Source: COGECO Inc.,
    Pierre Gagné,
    Vice President, Finance
    and Chief Financial Officer,
    (514) 874-2600