Corus narrowly tops second-quarter estimates
TORONTO -- Corus Entertainment Inc.'s (CJRb.TO) television business is regaining popularity with advertisers, chief executive Doug Murphy said Friday after the company's revenue growth beat analyst estimates in the second quarter.
The Toronto-based owner of the Global television network, specialty TV channels such as HGTV Canada, local radio stations and content production studios, said its overall revenue for the quarter totalled $384.1 million.
That was up four per cent from $369.5 million in the same quarter last year and above the Thomson Reuters Eikon estimate of $373.8 million.
"We are very pleased with the results this quarter and it further validates that our strategic priorities are working as we compete in this dynamic and fast-changing media marketplace," Murphy told analysts on a conference call.
Media companies with conventional print and broadcasting businesses have generally seen a serious decline in revenue as audiences and advertisers shift to video-on-demand, streaming video and audio content, and digital publications.
Corus has responded by experimenting with new ways to attract advertisers, including a new approach to selling audience segments, as well as new video and audio formats delivered by social media and downloads.
"We are committed to following our viewers and listeners across new and growing platforms and making smart investments in growth opportunities," Murphy said.
He said television ad revenue in the second quarter was up 11 per cent, which Murphy said was above the company's expectations. He added that TV ad revenue will also be up in the third quarter that ends May 31.
Overall television revenue from all sources rose 5.1 per cent to $353.5 million from $336.2 million a year earlier, while the revenue from the Corus radio division fell 7.8 per cent to $30.6 million from $33.2 million.
Murphy said Global Television is benefiting from the audience success of New Amsterdam, a medical-themed drama that launched last fall, and year-over-year audience growth at its HGTV, Food Network and W Network specialty channels.
At Nelvana and Corus Studios, which produce TV programming for both Corus and for international buyers, there are more than two dozen series that are in production or have approval to go into production.
"Our owned content investments drive audiences on our networks and diversify our revenues through international content sales. We call this our Corus advantage," Murphy said.
However, an accounting change in how Corus values its television brands contributed to a drop in its second-quarter profit compared with a year ago.
Its profit attributable to shareholders for the quarter ended Feb. 28 amounted to $6.3 million or three cents per share. That's down from a profit of $40 million or 19 cents per share in the same quarter a year ago.
On an adjusted basis, Corus reported a profit of seven cents per share for the quarter, better than analyst estimates but down from an adjusted profit of 20 cents per share in the same quarter last year.
Analysts had estimated adjusted profit of five cents per share for the quarter, according to Thomson Reuters Eikon.
One analyst noted during the conference call that general and administrative costs at the TV segment increased for the first time in several quarters and asked if Corus would pursue further cost-saving efforts to limit expenses.
Chief financial officer John Gossling agreed there's pressure for general and administrative expenses and programming expenses to start moving up, following a three-year period of reductions since it bought the Shaw Media business, which included Global.
Gossling said that Corus will "obviously focus us on . . . efforts to counter that but, given the kind of top line revenue we're driving, it's OK in terms of what's variable with the revenue line.