The Corus logo ios shown at Corus Quay in Toronto on Friday, June 22, 2018. THE CANADIAN PRESS/Tijana Martin
TORONTO – A potential move by Canada’s telecommunications regulator to ease some Canadian content spending requirements for Corus Entertainment Inc. would provide “much needed flexibility” amid programming and advertising uncertainty, the company’s CEO said Friday.
An application from Corus earlier this month asked the CRTC to “urgently” change some conditions for its English-language television stations and discretionary services. The commission said it is in favour of granting the company’s request but will first hold a consultation on the proposals.
Corus president and CEO Doug Murphy said Friday the relief would be much welcomed after the company faced a “double whammy” of fiscal challenges in 2023.
“The first blow has been the meaningful decline in advertising revenues. The second has been a significant increase and required spend on Canadian programming,” Murphy told analysts on the company’s fourth quarter earnings call.
“This one-two combination has resulted in a very challenging year for our company. Our focus remains on what we can control and influence.”
Corus reported a net income attributable to shareholders of $50.4 million in its latest quarter, a turnaround from its net loss of $367.1 million in the fourth quarter of last year. The television and radio broadcaster said its profits amounted to 25 cents per diluted share for the quarter ended Aug. 31, compared with a loss of $1.82 cents per diluted share in the same quarter last year.
Revenue totalled $338.8 million for the company’s fourth quarter, down slightly from $339.6 million a year earlier.
But on an adjusted basis, Corus said it recorded a loss of four cents per share for the quarter, compared with a loss of eight cents per share in the same quarter last year.
The company said overall revenue for the year decreased six per cent as a result of an 11 per cent decline in advertising revenue and a three per cent drop in subscriber revenue.
It said almost all advertising categories saw declines as advertisers continued to hold or reduce spending compared with the prior year.
The company has undertaken multiple cost-cutting measures, including the decision to cease production on “ET Canada.” It also closed Global News’ special series, “The New Reality.”
Murphy said Corus has also cut 15 per cent of its workforce this year.
“We have tenaciously implemented cost cuts and ongoing workforce structure reviews throughout the company to deliver reductions quarter by quarter, and to find ways to work differently and improve productivity across all aspects of our business to lower our cost base,” he said.
“We continue to look at all other opportunities to reduce costs.”
In a note, RBC Capital Markets analyst Drew McReynolds said the television advertising market is expected to remain under pressure heading into 2024.
He called the company’s situation an “exceptionally challenging operating environment” and said he expects Corus’ shares to come under further pressure next quarter.
In its application to the CRTC on Oct. 11, Corus requested the regulator lower the company’s obligation to spend 8.5 per cent of revenues on programs of national interest for its English-language stations to five per cent. It also asked the regulator to extend the repayment deadline for under-expenditures of Canadian programming requirements.
The company said it is facing multiple challenges, including recent strikes by the Writer’s Guild of America and the Screen Actors Guild in the U.S. that have affected its TV lineup, along with ongoing high inflation that has raised programming costs while reducing advertising demand.
The CRTC’s indication it will look to provide the relief requested by Corus “acknowledges the challenges and opportunities of the moment,” said Murphy.
“The regulator statement last week was the most substantive move toward regulatory change that our company has seen in years and we are encouraged by it,” he told analysts.
“Providing more flexibility for our spending “¦ is very helpful for our content planning. It helps us conceptually to make the kind of shows that really work for our networks because we want to produce content for our networks that drive audiences.”
While the writers’ strike ended last month, the labour dispute involving the Screen Actors Guild is ongoing. Murphy said there is hope across the industry that a resolution could be reached by U.S. Thanksgiving in late November.
“If that timeline is realized we could then have a full schedule by March, just in time for our second largest advertising revenue quarter,” he said.
“We’re cautiously optimistic that in the third quarter, we should have a full schedule that will move beyond a Frankenstein schedule to a very strong showing.”
This report by The Canadian Press was first published Oct. 27, 2023.
Companies in this story: (TSX:CJR.B)
