TORONTO – Revenue and income gains, free cash flow increases and debt decreases sum up a positive 2005 for radio, TV and production company Corus Entertainment.
Net income was $71.1 million in fiscal ’05, ended August 31st, compared to a $23 million loss last year. Free cash flow was $80 million, up 52% from last year, and the company saw double-digit profit growth for TV (W, YTV, CMT, Treehouse, etc) and radio (51 stations).
“This was a very satisfying year for Corus. Our broadcasting business results were strong with double digit advertising growth for both radio and TV. We also strengthened our competitive position from a ratings perspective,” said John Cassaday, president and CEO, in the press release. “The content division also continued its recovery and returned to profit. The significant increase in free cash flow was assisted by Nelvana’s strong cash generating performance.”
Consolidated revenue for the fourth quarter ended August 31, 2005 was $175.3 million, up 8% from $163 million last year as all three divisions generated increased sales. Consolidated segment profit of $42.6 million was flat compared to last year as a result of increased costs, the integration of several new radio stations in Quebec (purchased from Astral) and incremental costs associated with increased performing rights tariffs imposed by the Copyright Board of Canada.
Largely as a result of the unusual costs affecting the radio division, net income for the quarter was $9.7 million, compared to $14 million last year as we incurred a number of unusual costs most notably the new performing rights tariff on radio, which Cassaday opines on here.
Corus Television revenues for the fourth quarter were up 7% to $83.4 million from $78.3 million last year driven by double digit specialty advertising growth as well as strong subscriber growth at Movie Central. Quarterly segment profit was $30.8 million, up 7% from Q4 ’04.
Corus Radio delivered fourth quarter revenue growth of 12% to $65.3 million. Segment profit was effectively flat at $15.8 million as we integrated several new stations acquired as part of the Astral swap in Quebec and reflected the negative impact of newly announced tariff rates imposed by the Copyright Board of Canada. The new stations are expected to incur modest losses until the third quarter of fiscal 2006 as we build audience levels and grow our revenue base.
Nelvana revenues were $28 million up 1% from $27.7 million despite delivering 12 episodes in the quarter as compared to 33 episodes last year. Segment profit was $1.8 million compared to $0.1 million last year.
Fiscal 2005 consolidated revenues were $683.1 million up 2% from 2004. Consolidated broadcast revenue was up 8%. Segment profit for the year was $195.3 million compared to $90.4 million. Net income for the year was $71.1 million ($1.66 basic earnings per share and $1.65 diluted earnings per share) compared to a loss of $23.1 million (loss of $0.54 basic and diluted earnings per share) last year.
Television continued to generate strong audience and subscriber growth. Movie Central finished the year with 748,000 subscribers, an increase of 6% from last year. Overall television revenues grew 7% to $354.2 million. Segment profit grew 13% to $140.8 million compared to $125.1 million last year.
Radio division’s year end results reflected strong performance from all regions. Radio revenues were $252.7 million, up 11%, and segment profit was $69 million, up 15%.
On October 14, 2005 the Copyright Board of Canada released its decision on the tariffs to be imposed on radio broadcasters for the use of music. The basic tariff for large radio stations increased from 3.2% to 4.4% of revenue. The new tariff is for the period 2003 to 2007. The current cost of the increase of $2.6 million has been reflected in the 2005 segment profit for radio while the retroactive portion of the new tariff, $3.8 million, has been reflected in the 2005 financial statements as other expense. The industry is currently exploring avenues of appeal, said the Corus release.
