Q4 report shows a rough year with some bright spots
By Greg O’Brien
TORONTO – “I’ve described 2020 as the book of Covid,” Corus Entertainment CEO Doug Murphy told financial analysts Thursday morning while presenting the company’s fourth quarter results.
“Most of you know the story so far: Chapter one, shock and awe with widespread and unprecedented cancellations of advertising campaigns. Chapter two, stabilization, where we saw those cancellations eased. Chapter three was a modest recovery, when advertisers returned with retooled campaign messages that were conscious of the Covid pandemic,” he continued.
“We now find ourselves in the fourth chapter, which I initially referred to as sequential improvement, but later renamed ‘up-and-to-the right’. Our new up-and-to-the-right chapter is not just about advertising recovery, it also reflects our overall outlook for consolidated revenue.”
The fiscal 2020 numbers, for the period ended August 31st, of course, are ugly, thanks to Covid-19. Consolidated revenues declined 16% for the quarter, compared to Q4 2019, and 10% for the year, the company outlined in its press release today. Consolidated profit decreased 14% for both the quarter and the year and there was a net loss attributable to shareholders of $625.4 million for the year, which includes a Q3 write-down of its broadcast licenses and goodwill of $786.8 million.
On the TV side, revenues decreased 13% in Q4 2020 and 9% for the year as ad revenues decreased 25% in Q4 and 15% for the year and subscriber revenues were down 1% in both Q4 and for the year. Radio revenues decreased 43% in Q4 2020 and 28% for the year and profit on that side of the business decreased $5.7 million (83%) in Q4 and $18.6 million (54%) for the year.
However, the company has been able to pay down debt and its free cash flow remained strong at $87.4 million for the quarter and $296.2 million for the year.
The company’s StackTV package of 12 specialty channels which is being sold exclusively through Amazon Prime Video is nearing 300,000 subscribers (“and is very margin-accretive… and not cannibalizing the legacy channel bundles,” said Murphy) and the company is making gains with its advanced advertising technology, too.
“In the next few quarters, we expect advertising trends will continue to improve, with a return to growth in the second half of fiscal 2021,” he predicted.
“It can’t get big enough, soon enough.” – Doug Murphy, Corus Entertainment
The CEO also mentioned the company’s new three-year strategic plan, “one that will position Corus to emerge from the current crisis in a position of strength. This plan underpins our ambition to build a high performance, diverse and inclusive culture, firmly focused on delivering consolidated revenue growth year after year.”
A key to the growth plan, added Murphy on the conference call, is to push hard growing Nelvana and Corus Studios into global markets.
“We are already benefiting from the insatiable global demand for premium video content,” he said. “By creating content that delights our audiences on our networks in Canada, we set ourselves up for success with international licensing sales where countless opportunities abound.”
Since content sales make up less than 10% of Corus’s business, Murphy sees a big increase there as a way to deliver continuous growth for shareholders. “We will deliver double-digit growth in our content business. Our ambition is to create and accelerate sales from our slate of owned-content at Nelvana and Corus Studios,” he said.
Recent success there include the sale of Island of Bryan to Discovery Inc.’s HGTV U.S., which renamed the show Renovation Island and became the channel’s top show during its run. Corus Studios has also sold Fire Masters, Save My Reno, Big Rig Warriors, Scott’s Vacation House Rules, The Big Bake and Salvage Kings, among others, to American broadcasters.
“It can’t get big enough, soon enough… We need to get more revenue from outside of Canada and we’re pushing hard… We have doubled the investment we’re making in development, both in Corus Studios and Nelvana so we can have a bigger funnel of projects.”
For more on Corus’s Q4 results, please click here.
