Corus outlines strategic roadmap, CEO ‘optimistic’ about future

Corus Entertainment Inc. executives delivered a mapped-out vision for the company’s future that includes investing in more technology, better data use and more content in a “longer than usual” conference call Wednesday morning, following greater-than-expected losses in television advertising for the third quarter. “As you know, we’re in the midst of writing a new chapter for Corus,” Doug Murphy, CEO of Corus, began the conference call with analysts. “Our industry is in flux, and we need to adapt and respond.” The comments follow a third quarter that ended on May 31 with TV advertising revenue declining five per cent -- which Murphy said was higher than Corus anticipated -- and preceded a five-stage roadmap that Murphy outlined to steer the ship forward as it focuses on reducing debt, optimizing its core business and diversifying its revenue base. Murphy explained that the company would need to optimize its existing portfolio and continue building content partnerships, such as it has with Nickelodeon and Nelvana, follow viewers on all platforms, focus efforts on local content, own more content, and integrate more technology in the business. Corus has already moved on some of those fronts. The company’s social studio So.Da recently partnered with Twitter Inc. on new short-form series on the platform, which Murphy said is part of its overall effort to follow their audiences. The company also announced a podcast initiative called Curious to, in part, leverage its existing content in audio format. And on a previous conference call with analysts, Murphy said the company would launch an ad tech system in beta, called Cynch, that would better allow advertisers to reach their targeted audiences. The company also partners with Integrate.AI Inc., whose code helps the company generate viewership. “The ideal roadmap would include dynamic ad insertions, live local addressable advertising, access to data from all our channels as part of our carriage agreements, and more,” Murphy said. On the data front, a CRTC-mandated set-top box working group was created to develop an audience measurement system, which Numeris is working on. The CRTC noted in its decision to have such a system that data was crucial to the success of the broadcasting system. “It is critical that as more and more viewers migrate to on-demand, the industry must develop the capability not only to measure linear, but non-linear viewing across all platforms -- better measurement will mean more audiences measured in our ratings, which we can then monetize,” he added. After all, audience-based buying makes up 12 per cent of Corus’ ad revenue, Murphy noted. But the roadmap comes at a cost. Corus cut its dividend by 79 per cent as part of its revised capital allocation policy and its stock plunged as much as 17 per cent during trading Wednesday. The additional capital from the dividend slash will be about $150 million per year, which will go toward paying down the company’s debt, Murphy said, adding he expects the company to reduce its cost base every year going forward. Television revenues were down by roughly $19 million to $403 million against the same quarter last year. That segment’s profits were also down by about $11 million from last year, to about $161 million by the end of the quarter. Merchandising, distribution and other revenues decreased 19 per cent in the quarter to $22.2 million, advertising revenues fell to $254.7 million in the quarter, while subscriber revenues were also down, by one per cent to $126.2 million. The news also follows the Competition Bureau denying the sale of Corus’ two French-language specialty channels – Historia and Series+ – to BCE Inc. Corus said later that the two companies agreed to officially terminate the deal. Radio was at a loss but a bit better than its TV peer, with its revenues dropping by about $1 million to $38 million in the quarter. However, profits were nearly flat for the segment at about $11.5 million. Murphy said radio is “very, very steady.” He said the segment and its local nature can be strong enough to offset weaker national developments for the company. Overall revenues fell four per cent to $441.4 million and segment profits were down year-over-year by about $6 million to $170.4 million. Observers were perhaps already anticipating a downdraft on the company’s stock price, following a Globe and Mail report earlier this month that said Shaw Communications Inc. was looking to sell its stake in Corus, citing anonymous sources. Murphy refused to comment on the report following its release. Other obstacles for Corus include proposed Bill S-228, on third reading in the House of Commons, that expects to significantly reduce junk food advertising on TV. Though Corus has said the impact will be felt, Murphy noted that the impact is still two years out and Corus has the ability to shift its advertising space. “We anticipate a bumpy road over the short-term as our industry evolves,” Murphy said. “We believe we have the right plan and the right team to tackle challenges and position the company for long-term success.” Murphy praised the CRTC’s Harnessing Change report, which outlines recommendations by the regulator to address programming distribution models and said Corus is hopeful that the government will “follow quickly.” He said there needs to be more “rapid decision-making” and not another “process.” “I’m more optimistic today than I’ve been in a very long time, because there appears to be a willingness to engage and listen,” Murphy added. “Regulatory and policy reform just can’t happen fast enough.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Bryson Masse at bmasse@thewirereport.ca

Corus outlines strategic roadmap, CEO ‘optimistic’ about future

News | June 27, 2018

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Corus outlines strategic roadmap, CEO ‘optimistic’ about future

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