TORONTO — Corus Entertainment unsurprisingly reported a pretty rough third fiscal quarter, thanks to the Covid-19 crisis.
While consolidated revenues and segment profit declined 24% and 35%, respectively, compared to last year’s Q3, the company also saw a 31% drop in TV ads and radio ad revenue dropped 52% for the three month period ended May 31.
The company also reported a $752.3-million net loss for the first quarter in which the company felt the full impact of the Covid-19 crisis. That loss includes non-cash impairment charges related to broadcast licences and goodwill write-down of $786.8 million, says the news release.
“In Q3, we saw increased viewership and engagement across all of our platforms, as Canadians rediscovered the power of television and Corus,” said president and CEO Doug Murphy, in the press release.
“With the economy materially impacted by the Covid pandemic, these audiences were not optimally monetized as advertising demand is tightly correlated to sales and economic activity. This week we held our virtual upfront, revealing a very strong fall schedule which, when coupled with these recent viewing trends, gives us reasons for optimism in the coming year. Notably, our subscriber revenue remained resilient, benefitting from the accelerated uptake of StackTV. In this unprecedented environment, Corus remains intensely focused and disciplined as we manage the business, advance our strategic priorities and maintain a solid financial position.”
During the company’s morning conference call with financial analysts, Murphy said StackTV (the 12-channel lineup of the broadcaster’s on demand and linear TV services available via Amazon Prime Video for $12.99/month) customers had topped the 200,000 mark.
Corus reported consolidated revenues of $349 million for the third quarter of 2020, down from $458.4 million in the same quarter of 2019. Looking at Corus’ individual segments, its television division reported $331.3 million in revenues for Q3 2020, a 21% decrease from Q3 2019. TV advertising revenues decreased 31% in Q3 2020, compared to Q3 2019, and subscriber revenues were flat in Q3 2020. Profit for the TV segment was down 30% in Q3 2020 compared to the year before.
For its radio segment, Corus reported revenues of $17.6 million in the third quarter of 2020, a 52% decrease from Q3 2019. The radio segment experienced a loss of $1.8 million in Q3 2020, compared to a $9.8-million profit reported in Q3 2019.
There are some positive signs on the radio front, however insisted Murphy, who noted “a significant increase in streaming, as listeners find new ways to access our Corus radio stations digitally to the RadioPlayer app on mobile devices or voice activated devices at home or via Internet-connected televisions,” he told analysts.
As well, “for you rock fans out there, rock music is back during this pandemic. In Vancouver, our two rock stations, CFOX and Rock 101, are ranked one and two and in Toronto, for the first time in more than a decade, Q107 is a top three station.”
Corus’ decline in TV advertising revenue in Q3 2020 was larger than expected, according to industry analysts. In a note to investors this morning, Scotiabank analyst Jeff Fan said the 31% decrease in TV advertising revenue was worse than its expected 24% decline. However, the weaker TV ad revenue was partially offset by better-than-expected TV subscription and content revenues, Fan said. Also, lower costs in the company’s radio and corporate segments helped to keep Corus’ EBITDA only slightly below Scotiabank’s estimate, and the company’s free cash flow was ahead of expectations and was stable due to good working capital management, Fan added.
In another investor note today, Canaccord Genuity analyst Aravinda Galappatthige also said Corus’ TV ad decline was steeper than it was figuring, with Canaccord having previously estimated a 20% decrease for the quarter. Galappatthige also said Corus’ radio revenue of $17.6 million was below his expectation of $25.9 million, with advertising sales materially impacted by the effects of Covid-19 and the related closure of retail stores.
In a Covid-19 update included in its Q3 2020 financial results report, Corus says it has implemented a pandemic response plan with health measures to continue providing essential services and support to customers while safeguarding the health and safety of employees.
The company also praised the federal government’s Canadian Emergency Wage Subsidy (CEWS) Covid crisis response program which allows companies to access funding if they have lost more than 30% of their revenue in a given month. Corus CFO John Gosseling told analysts the company received $10 million from the program in May to help pay wages and avoid layoffs. Both Murphy and his CFO told the call they are anxious to see how the federal government extends the plan or modifies it so companies still facing a significant hit, if not fully 30% will still qualify for aid.
To read the company’s full Covid-19 update and financial results for Q3 2020, please click here.
