By Ahmad Hathout
Corus CEO Doug Murphy said on the company’s fiscal first quarter conference call Friday that the point at which there’s recovery in advertising demand and revenues is too early to tell, as he said the company is happy to put behind a rough 2023 in which it pleaded with the CRTC to reduce its regulatory obligations.
“On the one hand, we expect the return of new scripted programming to catalyze primetime marketing investments by our advertisers,” he said on the call. “On the other hand, the macro-economic environment remains uncertain while distortions related to post-pandemic normalization of many advertising categories persist, resulting in continued low visibility.
“As a result of the recent Hollywood strikes, we’ve experienced declines in all ad categories in Q1, reflecting the broad impact of reduced advertiser demand given lower audience delivery,” Murphy said, adding it’s too early to provide an outlook on the third quarter.
But Murphy said there have been wins that could show in the second quarter, including the resolution of said Hollywood strikes and the theatrical success of the Barbie and Oppenheimer titles. He noted the automotive sector has returned to marketing investments in the U.S. and Canada on linear television as supply chain concerns subsided.
But he cautioned that other important advertising categories, including consumer packaged goods, are still in flux.
“Certain categories were influenced by other factors,” he noted. “For example, financial services advertising declines, we believe, result in increases in interest rates. Advertising and communications services, we suspect, has been negatively affected by industry consolidation and agency changes.”
The tough advertising climate in 2023 could aptly be explained by the number of applications the CRTC had received from major content and broadcasting players to adjust their regulatory obligations to keep up.
The commission held the preliminary view that Corus should get relief on its regulatory obligations considering its poor financial health. But it’s the exception, not the rule because the CRTC determined that it is not a vertically integrated business like Rogers or Bell.
But that hasn’t stopped Rogers, Bell, Quebecor and Cogeco from reiterating that the current advertising market – combined with the fact that foreign streamers don’t have to make the same regulatory contributions yet – have made it difficult for them to compete. A number of them have filed applications to the CRTC requesting more flexibility.
For the three months that ended on November 30, Corus reported an overall decline in revenues in the television and radio space. Television revenues were at $342.4 million compared to the $401.5 million on a year-over-year basis. Radio revenues were were also down to $27.5 million, compared to the $29.6 million it made last year. Total revenues for both segments in this quarter were $370 million compared to the $431.2 million it made last year.
Television profits were also down to $121.8 million as compared to the $131.8 million last year. Radio was also down to $4.5 million compared to the $6 million it made last year.
Subscriber revenues were also down to $118.2 million compared to the $127.5 million it made in the same quarter last year. Distribution, production and other revenues were also down to $14.9 million compared to $21.5 million last year.
The company had incurred $10.8 million in restructuring and other costs, compared to $2.8 million in the same quarter last year. Those restructuring costs are associated with job cuts and “system integration.”
But the company has been optimistic about and focused on its digital products, as it makes distribution moves on its Stack TV streaming service – including a deal to have the streaming service on Bell Fibe TV.
