Release Date: April 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Corus Entertainment Inc (CJREF, Financial) successfully amended and extended its credit facility, providing improved terms and financial flexibility.
- The company reported a 12% growth in total minutes viewed for Global News across both broadcast and streaming platforms.
- Corus' specialty networks, Home Network and Flavour Network, have become the number one and number two specialty lifestyle networks in Canada.
- The company's streaming portfolio experienced its strongest Q2 ever, with an 18% increase in streamed content over the previous year.
- Corus has implemented significant cost-saving initiatives, resulting in a 12% reduction in G&A expenses and a 15% decrease in employee costs.
Negative Points
- Consolidated revenue for the quarter decreased by 10% compared to the prior year, primarily due to lower television advertising demand and subscription revenue.
- The company is experiencing challenges in its specialty portfolio due to an oversupply of digital video inventory and lower advertising demand on linear television.
- Consolidated segment profit margins fell to 6% from 18% last year, reflecting the impact of lower revenue and increased amortization of program rights.
- Corus anticipates a mid-teens percentage decline in television advertising revenue for Q3 of fiscal 2025 due to oversupply and potential economic impacts.
- The radio segment saw a 14% decrease in revenue due to lower advertising demand and audience declines, although cost containment measures improved profit margins.
Q & A Highlights
Q: Can you clarify the impact of the free view period for Home and Flavour on subscription revenue?
A: John Gossling, CFO, explained that the revenue from existing subscribers continued during the free view period. The free view was for non-subscribers, so there was no loss of revenue from existing subscribers.
Q: How will the Stack TV price increase affect future subscription revenue?
A: John Gossling noted that the price increase would positively impact ARPU (Average Revenue Per User), though there might be some initial churn as customers adjust their streaming services. The long-term effect is expected to be positive.
Q: Are there any potential impacts from US tariffs on your content exports?
A: Troy Reeb, Co-CEO, stated that most US content supply is secured under existing deals, and most sales are ex-US. There is no clarity on whether Canadian programming will be tariffed, but existing contracts would still require counterparties to purchase content.
Q: Can you explain the significant cash inflow in Q2 and expectations for Q3?
A: John Gossling attributed the cash inflow to normal seasonality and delayed programming payments, which will reverse in Q3. Additionally, deferrals on government remittances will benefit Q3.
Q: How is the "Buy Canadian" movement affecting advertising trends?
A: Troy Reeb mentioned that while there is intent from Canadian advertisers to support the movement, it's too early to determine a meaningful shift. Some advertisers have already partnered with Corus for campaigns with "Buy Canadian" messaging.
Q: What is the impact of the new lending agreement on Corus' operations?
A: John Gossling explained that the new credit facility provides a longer runway and removes uncertainty, allowing Corus to focus on its business without the pressure of short-term financial constraints.
Q: How are the new networks, Home and Flavour, performing in terms of advertising and ratings?
A: John Gossling stated that Home and Flavour are performing well, comparable to Corus' top specialty channels. Troy Reeb added that they are achieving their advertising estimates despite new competition.
Q: What is the outlook for program amortization costs?
A: John Gossling indicated that while there will be some inflation on top-rated programming, Corus is focused on reducing costs. The goal is to spend less overall, despite ensuring key acquisition titles are secured.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
