By Ahmad Hathout
Corus executives said Friday they are confident the media company can lead in the lifestyle content segment, following what they say were strong fall viewership period for its newly branded food and home channels.
Co-CEO Troy Reeb said during a first quarter earnings conference call that the networks, Flavour and Home, have seen consistent viewership since it rebranded from Food Network and HGTV Canada – the rights to which were acquired by Rogers in a blockbuster deal this past summer.
Reeb cautioned that those now-competing channels have popular programming attached to them, meaning there will be fluctuations in audiences. Despite this, he said the maintenance of BDU carriage of its networks – including a new carry extension with Bell announced this week – and the performance of its new brands, in what he called a “blowout quarter” in the fall, gives the company optimism in a competitive market, he said.
But these strong audience numbers don’t necessarily translate to good television advertising revenue. The company reported a decline of 16 per cent in that revenue to $177 million compared to the same period last year. Subscriber TV revenue over that period was down two per cent to $116 million. Overall television revenue was down 11 per cent to $304 million and profit was down 29 per cent to $86 million year-over-year.
Reeb attributed that, in part, to competition in the space – not just from traditional program rights wrangling with its domestic peers, but foreign streamers, too. The latter, including Netflix, Amazon, Paramount+, and Disney+, have introduced ad-supported tiers that have served to inject more premium content supply for advertisers and further fragment that spend.
“For us, when it comes to the market dynamics question … we work through virtual distributors like Amazon and rely on them to deliver some of our ad load to StackTV,” Reeb said Friday, referring to the company’s streaming service. “We now compete with them for that ad load, just as we now compete with some our distribution partners in the traditional sense for program rights, and I think when there was the [labour] strike and advertisers started looking for alternatives to traditional TV for some of their buys, maybe they didn’t come back to TV as quickly as we would have liked.”
Reeb noted that the company had a lot of unsold inventory from the higher ratings in the fall, which he said should give the company a tailwind as it enters the next quarter.
Overall revenues for the company were down 12 per cent year-over-year to $327 million, due to lower demand for linear advertising and over-supply of premium digital inventory from foreign competitors, lower subscription and distribution, production and other revenue, according to its balance sheet. Meanwhile, profit was down 30 per cent to $84 million, attributed to lower revenue and higher programming costs from the return of the normal fall schedule, partially offset by the benefits of cost savings initiatives, the company said.
Reeb also reflected on the CRTC’s latest broadcasting consultation, announced Thursday, that seeks to review the market dynamics to ensure a level playing field. “The sustainability of Canada’s broadcasting system depends both on the ability of new and existing services to access the system and on Canadians’ ability to discover the diverse content it offers,” the CRTC said in Thursday’s consultation document.
Reeb called the consultation “long overdue,” “incredibly important” and a sign that the regulator wants to ensure the equitable treatment of broadcasters and producers. He urged the CRTC to “hurry” with it.
Over the past several months, Corus and Rogers have been in a regulatory and legal battle over the cable giant’s desire to move Corus’s newly branded content down the dial on cable. Rogers says the Flavour and Home channels don’t have the same American content that it now owns through its deals with WBD and NBCUniversal, so it doesn’t want its customers confused as to where to find that premium American content.
But Corus has long maintained that its Flavour and Home channels are similar to Food Network and HGTV Canada, accusing Rogers of trying to adopt the goodwill it built on those channel slots for years. (Rogers argues Corus’s argument “defies logic” because it’s Rogers that owns the rights to broadcast the WBD content.)
Corus’s overarching allegation is that Rogers is exploiting its position as the largest broadcaster to squeeze independents, like itself, out of the market. But Rogers has called these allegations completely baseless, noting that its broadcasting moves are legitimate business decisions.
Rogers, in fact, filed an application at the Federal Court of Appeal challenging the CRTC’s decision to force it to continue carrying some of Corus’s channels and to keep them at the same channel slots. The cable giant has pointed out that it has already obtained an Ontario Superior Court opinion stating that it has the right to do that, based on a reading of its distribution agreements.
This week, Bell similarly filed an application at the CRTC challenging Rogers’s desire to move its USA Network and Oxygen True Crime channels down the Rogers dial. Rogers says this is the same case as with Corus’s channels: Bell lost the rights to Discovery (now USA Network) and Investigation Discovery (now Oxygen True Crime) – rights that it now owns and that were in those channel slots. No channel realignments have been made as they are tied up in appeals.
Reflecting on these issues, Reeb noted that Corus is not a direct-to-consumer business. “We have relied on our relationships with the BDUs, but those dynamics have been changing, as we’ve seen with some recent moves, and it’s important that the balance be maintained so that audiences can receive the programming they obviously want from broadcasters like us.”
Corus, which was previously granted by the CRTC some reprieve on its regulatory obligations for its financial struggles, reported lower revenue on radio, down 14 per cent to $24 million, and a 15 per cent lower profit at $4 million – both figures compared to the same quarter last year and both attributed to lower advertising revenue.
