Corus reports wider Q4 loss on lower advertising revenue amid ‘industry challenges’

The Corus logo at Corus Quay in Toronto is in this June 22, 2018 file photo. THE CANADIAN PRESS/ Tijana Martin

TORONTO — TORONTO - Lower-than-expected television ad revenue weighed on Corus Entertainment Inc.’s latest results, a trend it expects to continue into next year.

The Toronto-based radio and television broadcaster said it had anticipated TV advertising revenue to fall about 20 per cent year-over-year in its fourth quarter due to lingering geopolitical and economic uncertainty. But it came in slightly weaker than that, falling 23 per cent from the prior year to $88.7 million.

“Our fourth quarter and year-end results, along with our outlook for the first quarter, reflect the continuation of trends we were seeing in the advertising market,” said chief executive John Gossling on the company’s earnings call. “Specifically, our linear TV results reflect broader market and macro and economic conditions.”

He added that TV advertising revenues in the fourth quarter were “moderately lower than the outlook” the company provided on its third-quarter earnings call in June.

The company noted that it expects economic uncertainty, coupled with the ongoing shift in advertising demand to digital platforms, to continue to drag on its results.

Asked by an analyst whether the Toronto Blue Jays’ appearance at the World Series was eating into advertising at Corus, Gossling said it seems likely, since advertisers tend to focus their ad spend on a big run for a sports team in much the same way they do during the Olympics. (Rogers Communications has the Canadian rights to the baseball games.)

“The audiences for Blue Jays domestically have been massive -- more than 5 million a night if you look at all the combined linear networks. I think for sure that’s having an impact.”

He emphasized, however, that the effects of the baseball post-season are short-lived.

Gossling said that some of the challenges Corus is facing are occurring across the entire industry.

“We are all seeing a challenging advertising environment due to ongoing geopolitical and economic uncertainty and increased levels of advertising inventory available from competing digital players. As a result, our ongoing focus on disciplined cost management and operational efficiencies will remain in place,” he said.

The company reported a loss of $277.1 million attributable to shareholders in its latest quarter as it took a $263.6 million non-cash impairment charge and saw its revenue fall 14 per cent.

The loss amounted to $1.39 per diluted share for the quarter ended Aug. 31 compared with a loss of $25.7 million or 13 cents per diluted share in the same quarter last year.

On an adjusted basis, Corus says it lost 36 cents per share in its latest quarter compared with a loss of two cents per share a year earlier.

Revenue for the quarter totalled $232.1 million, down from $269.4 million a year earlier.

RBC analyst Drew McReynolds said in a note to clients that the company’s latest results and outlook were below expectations, and viewed it as “negative for the shares at current levels.”

Corus, which owns specialty television services, radio stations and conventional television stations, as well as digital and streaming platforms, also said that it has reached an agreement to amend its credit facility to increase the maximum amount it can borrow on a “revolving” basis to $125 million from $75 million.

The company has been on the hunt for cost savings, and slashed seven per cent of employee costs in its previous quarter.

The company said at the time that the job losses were part of an overall nine per cent reduction in general and administrative expenses during its third quarter, which totalled $10 million in cost savings.

During the previous quarter, Gossling highlighted a CRTC decision that confirmed Corus’ eligibility to receive funding from the Independent Local News Fund.

Jennifer Lee, the chief administrative and legal officer at Corus, said on the earnings call that the company has started to receive some of that funding.

By Daniel Johnson.