Corus revenue exceeds expectations

Corus Entertainment’s television business regains popularity with advertisers, chief executive Doug Murphy said Friday as quarterly results show Q2 revenue exceeded expectations.

The Toronto owner of the Global television network, specialty television channels such as HGTV Canada, local radio stations and content studios, reported total revenue for the quarter of $384.1 million.

This revenue was 4% higher than the 369.5 million in the same quarter last year, and higher than the 373.8 million expected by analysts, according to forecasts by Thomson Reuters Eikon.

“We are very pleased with the results of this quarter and this further confirms that our strategic priorities are working as we compete in this fast-changing, dynamic media market,” Murphy told analysts at the time in conference calls.

Media companies in the conventional print and broadcast sectors are generally experiencing a sharp decline in revenues as audiences and advertisers turn to video-on-demand, streaming audio and video, and digital publishing.

Corus has responded by experimenting with new ways to attract advertisers, including a new approach to selling audience segments, as well as new audio and video formats delivered by social media and downloads.

“We are committed to following our viewers and listeners on new growth platforms and making smart investments in growth opportunities,” Murphy said.

He added that television advertising revenues increased by 11% in the second quarter, which he said was higher than the company’s expectations. TV advertising revenue is also expected to increase in the third quarter, ending May 31.

Overall, television revenues increased 5.1% to $353.5 million, compared to $336.2 million the previous year, while those in the Corus radio division declined by 7.8%, from 33.2 million to 30.6 million.

According to Murphy, Global Television is benefiting from the popular success of “New Amsterdam”, a medical drama series launched this fall, as well as the annual audience growth of its specialty channels HGTV, Food Network and W Network.

In Nelvana and Corus studios, which produce television programs for Corus and for international buyers, more than two dozen series are in production or have been approved.

“Our investments in proprietary content drive audiences on our networks and diversify our revenues through international content sales,” Murphy said.

Profits down

Nevertheless, Corus reported a decline in its second quarter earnings compared to last year, which it attributed to a change in the accounting used to value its TV brands.

Corus posted earnings attributable to shareholders of $6.3 million, or 3 cents per share, for the quarter ended February 28. In comparison, she had earned a profit of 40 million, or 19 cents per share, in the second quarter of last year.

On an adjusted basis, Corus posted a profit of 7 cents a share for the quarter, down from 20 cents a share last year.

Analysts were betting on average adjusted earnings per share of 5 cents for the quarter, according to Thomson Reuters Eikon.

During the conference call, an analyst noted that the general and administrative costs of the television segment had increased for the first time in several quarters. He asked if Corus would continue its cost reduction efforts to limit its spending.

Chief Financial Officer John Gossling acknowledged that there was pressure on general and administrative expenses as well as programming expenses after a three-year reduction period following the acquisition of Shaw Media, which included Global.

Mr. Gossling said Corus would “obviously focus on […] the efforts to counter this,” but that it seemed appropriate given the sheer amount of revenue that the company generates.