TORONTO – The chief executives of Corus Entertainment Inc. say they’re encouraged by responses to the launch of its two new lifestyle brands, but acknowledge “fluctuations” in audience levels could still lie ahead after it lost the content rights for Food Network and HGTV.
Speaking to analysts on the television and radio broadcaster’s first-quarter earnings call Friday, co-CEO Troy Reeb called the Dec. 30 launch of Flavour Network and Home Network “very encouraging” thanks to strong advertiser interest and audience demand.
“While still early, obviously, the ratings for these channels have remained consistent with prior to the rebrands,” he said.
“While certainly some shifts in audience behaviour may yet occur due to new competing channels, we are very pleased to have maintained all of our carriage for these networks.”
Last June, Rogers Communications Inc. announced it had signed a multi-year deal with Warner Bros. Discovery to nab the rights to popular lifestyle and entertainment brands in Canada, such as Food Network and HGTV, away from Corus.
Corus replaced those brands with Flavour and Home, which it said would air original shows that were meant for those networks. Both new channels are currently available for two-month free previews across most major TV distributors.
With Rogers’ rights to Food Network and HGTV taking effect on Jan. 1, co-CEO John Gossling acknowledged there is “clearly more competition in the market,” which means “advertisers have more choice.”
“There are two new competing channels that have some popular programming attached to them, so there’s going to be some fluctuations in audience,” added Reeb.
“We’re still feeling very good that we will continue to be the dominant player in the lifestyle space. Will that fragment advertising that has traditionally come to those channels? I think it already has a bit, and we’re dealing with that.”
The broadcaster reported Friday that its first-quarter profit fell compared with a year ago as its revenue dropped 12 per cent. It said it earned a profit attributable to shareholders of $11.9 million or six cents per diluted share for the quarter ended Nov. 30.
The results compared with a profit of $32.7 million or 16 cents per diluted share in the same quarter last year.
Revenue for the quarter totalled $327.2 million, from $369.9 million a year earlier.
Corus said the overall decrease came as television revenue fell to $303.6 million compared with $342.4 million in the same quarter last year — a decline of around 11 per cent. Television advertising revenue was down around 16 per cent while subscriber revenue fell two per cent.
Radio revenue totalled $23.5 million, down from $27.5 million.
On an adjusted basis, Corus said it earned 14 cents per share in its latest quarter compared with an adjusted profit of 20 cents per share in the same quarter last year. Analysts on average had expected a profit of 10 cents per share, according to LSEG Data & Analytics.
The company has been undergoing a “rightsizing” initiative to cut costs amid its balance sheet struggles. It has shed around 800 jobs, or around 25 per cent of the company’s full-time workforce, compared with the beginning of its 2023 fiscal year.
In October, Corus agreed to a deal with its lenders meant to buy it some time as it works to slash costs and reduce its debt.
The agreement amends and restates its existing syndicated, senior secured credit facilities with its bank group, led by RBC Capital Markets and TD Securities. The restated credit facility was changed to reduce the total limit on the revolving facility to $150 million from $300 million and increase the maximum total debt to cash flow ratio required under the financial covenants.
“Despite our improved audiences in the last two years, the advertising marketplace has changed rapidly,” Reeb told analysts.
“In response, we are intensely focused on balancing supply and demands while rolling out new initiatives that provide strong rationale and incentives for advertisers to buy TV and streaming video from Corus.”
He cited an “abundance of premium digital video inventory” that has resulted from major streaming services offering ad-supported tiers to customers.
On Thursday, the CRTC said it is continuing to examine how the Canadian broadcasting system can survive the shift away from traditional TV to international streaming platforms, as the regulator announced a public consultation on those market dynamics.
The consultation is part of the commission’s work on implementing the Online Streaming Act, which updated broadcasting laws to capture online platforms such as Netflix, Amazon and Disney+.
The CRTC said the Canadian broadcast industry is at a crossroads and “facing profound changes” posed by new technologies and changes in consumer habits and global competition.
Reeb said that while Corus is encouraged by the CRTC’s announcement and continues to “forge necessary changes” internally, there remains an urgent need to adapt regulations and level the industry’s playing field.
“The current competitive environment unfairly advantages foreign digital giants as well as some dominant domestic distributors to the detriment of Canadians,” he said.
“The regulatory process grinds very slowly in Ottawa. We’re happy that it continues to grind, and we would encourage it to hurry.”
This report by The Canadian Press was first published Jan. 10, 2025.
Companies in this story: (TSX:CJR.B)
