Corus still feeling effects of advertising recession

Corus Entertainment Inc. president and CEO Doug Murphy said an “advertising recession” is the cause for a decline in revenues seen this quarter. “This is clearly visible in our revenue results for the quarter and evident across the entire media sector as reported by all of our peers recently. The decrease in advertising revenue is the logical result of companies trying to manage their profitability as they contend with inflation and cost increases and the impact of supply disruptions on their businesses. The first choices companies make is to reduce costs and cut discretionary spending such as advertising," Murphy said in a Friday morning quarterly call with analysts. Corus posted its first quarter results Friday morning. The company saw a seven per cent dip in revenue in its first quarter results for 2023, compared with last year. Revenue totalled $431.2 million for the three months ending Nov.30, 2022, down from $463.9 million a year earlier. Radio revenue saw $600,000, or a two per cent, increase from the first quarter of 2022, totalling $29.7 million. Television revenue fell to $401.5 million this quarter from the $434.7 million the company posted this time last year – an eight per cent decrease. Television subscription revenue remained relatively the same compared to last year, earning $127.5 million. Television advertising revenue saw the biggest decline, 11 per cent, falling to $252.5 million compared to the $285 million generated this time last year. “While we are firmly of the view that we are in an advertising recession, our expectations are that we will see sequential improvement in the rate of our advertising revenue decline as we progress through the coming quarters,” Murphy said. Net income for the period came in at $34.6 million compared to $80.9 million this time last year. Corus is required to pay $50 million in Canadian programming expenditures (CPE) shortfalls. Murphy said once Corus’ CPE “catch-up burden” passes, it will see approximately $20 million of recurring cost savings. In Aug. 2022 the CRTC denied a request made by the Canadian Association of Broadcasters (CAB) to waive conditions of licence and regulations relating to broadcasters’ expenditures for the 2020 broadcast year. Instead it opted for an extended payment approach to benefit the entirety of the broadcasting industry. The CRTC ruled that, in regard to the required CPE, it will allow licensees of the large ownership groups in the television sector to pay incurred shortfalls as of Aug. 31, 2020, by no later than Aug. 31, 2023. RBC Dominion Securities Inc. analyst Drew McReynolds said in a Friday note that Corus’ first quarter results are “better than feared” given the current volatile macro environment. Murphy also thanked outgoing chair CRTC Ian Scott and welcomed new chair Vicky Eatrides while also encouraging the regulator “to move with purpose and act quickly” to update its “decades old” broadcasting policies. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Corus still feeling effects of advertising recession

Broadcast | January 13, 2023

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Corus still feeling effects of advertising recession

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