Corus CEO expects improved ad spending with Hollywood strikes in rearview mirror

TORONTO — The chief executive of Corus Entertainment Inc. says the television and radio broadcaster is beginning to see signs of improved advertising demand following a turbulent 2023, but that it’s too early to predict the timeline of a full recovery.

The recent Hollywood strikes, which have since been resolved, resulted in revenue declines across all advertising categories during the company’s most recent quarter which ended Nov. 30, CEO Doug Murphy said Friday.

He said certain advertising revenue streams took a hit from other factors such as higher interest rates, consolidation in some industries and agency changes.

“It won’t surprise anyone on today’s call when I say we are excited to put 2023 behind us,” Murphy told analysts as Corus reported its 2024 first-quarter results.

“The relaunch of our scripted programming schedule in the winter and spring represents an exciting opportunity for our advertising partners as the return of many fan favourites is expected to result in strong audience delivery.”

Corus reported a first-quarter profit of $32.7 million, up from $31.4 million a year earlier, as its revenue fell 14 per cent. Profit for the quarter amounted to 16 cents per diluted share, unchanged from a year earlier.

Revenue totalled $369.9 million in the quarter, down from $431.2 million a year earlier. The drop came as television revenue was $342.4 million, down from $401.5 million a year ago, while radio revenue was $27.5 million, down from $29.7 million.

On an adjusted basis, Corus said it earned 20 cents per share, up from an adjusted profit of 17 cents per share a year earlier.

The results were ahead of forecasts “in an unusual strike-impacted quarter due mainly to lower programming costs and cost efficiencies,” said RBC Capital Markets analyst Drew McReynolds.

“While visibility remains limited on the magnitude of the recovery in television, we view results as a modest positive for the shares at current levels,” he said in a note.

The company undertook multiple cost-cutting measures last year, including the decision to cease production on “ET Canada.” It also closed Global News’ special series, “The New Reality.”

Last fall, Murphy said Corus had cut 15 per cent of its workforce throughout the year.

TV employee costs for the most recent quarter were down five per cent mainly as a result of those layoffs, the company said Friday.

Asked if Corus was finished undergoing cost cuts or if more could be expected moving forward, Murphy said the company is “doing more work.”

“There’s an intense focus on continuing the momentum that we’ve shown thus far, so it will carry on throughout the year,” he said.

Following the resolution of the Writer’s Guild of America and the Screen Actors Guild strikes in the U.S., Corus expects the return of new scripted programming to accelerate spending by advertisers. But Murphy cautioned that the macroeconomic environment “remains uncertain.”

He also reiterated Corus’ long-term requests for regulatory relief from the CRTC, noting “there’s still a few open switches we’re waiting on.”

Corus asked the CRTC last fall to “urgently” change some conditions for its English-language television stations and discretionary services.

That included a plea to 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. The commission had said it was in favour of granting the company’s request but wanted to first hold a consultation.

“As I’ve said before, our regulatory environment has not kept pace and now holds us back. While we’ve seen some encouraging progress over the last 12 months after years of inaction, there remains much ground to cover,” Murphy said.

“We’ll do our part to build a brighter future. We call on Ottawa to do theirs by moving quickly to update decades-old broadcasting rules. It’s long past time for a fair and equitable regulatory framework in Canada.”

This report by The Canadian Press was first published Jan. 12, 2024.

Companies in this story: (TSX:CJR.B)

Sammy Hudes, The Canadian Press