TORONTO – With huge top and bottom line growth in radio, Corus Entertainment today went to some lengths to show that it isn’t just happenstance or an anomaly, but a broad-based resurgence.
The company’s third quarter results, released Thursday, showed the company’s radio profits surged by 21% on a 12% increase in ad revenue. For public companies, this is always challenging. It’s great news now, but then the company is under pressure to grow even more next year.
Company CEO John Cassaday showed financial analysts late Thursday afternoon how broadly-based the spike in ad revenue is, saying 12 of the company’s top 20 advertisers are spending 10% more in fiscal 2005 (which ends August 31st) than they did in 2004. Corus has 53 radio stations spread across the country.
Of Corus Radio’s top 100 advertisers (all of whom spend at least $300,000 with the company annually), “35 of the top 50 were up versus a year ago and 77 of the top 100 are above a year ago,” said Cassaday.
Sixty of the top 100 clients are spending 10% more this year than in 2004.
And, beyond individual advertisers, entire categories are pacing well ahead of last year. Cassaday said that retail advertisers are up 14%, Automotive is up 22%, beer and wine coolers are up 10%, financial services up 17% and food and related, 46%.
“The growth is, in fact, quite deep from both an advertiser and a category perspective,” said Cassaday.
So where’s all this new money coming from? Some say that thanks to the NHL lockout, ad dollars which were meant to be spent on hockey went elsewhere, like to radio. Cassaday doesn’t think so. He believes media buyers are hot on radio because they are shying away from conventional television and print, especially when it comes to the Toronto market, where Corus has 102.1 The Edge, Q107, 640 Toronto and spillover from Hamilton stations Y108, 900 CHML and Country 95.3.
“In Toronto we’re benefiting from two factors,” explained Cassaday. “First, the regionalization of television buys in Ontario makes it harder to buy locally and secondly, the fact that advertisers are eating up large portions of their TV budgets on one buoyant network – specifically CTV – and a buoyant specialty (television) market.
“As a result, radio has provided an excellent vehicle to secure additional weight in the hard-to-reach Toronto market,” he added.
When it comes to the hockey situation and how the NHL lockout affected Corus Radio, the stations which are rights holders for live games in Toronto, Vancouver and Montreal took a bit of a hit, but when adding up the spend of its hockey advertisers (like General Motors, Tim Hortons, Canadian Tire, Molsons, Visa and Royal Bank), those companies actually accounted for $4 million of Corus Radio’s growth in fiscal 2005, “and most of them have come back for the fall at higher levels than a year ago,” said Cassaday.
Added Corus Radio president John Hayes: “I think that as advertisers demand more accountability in their ad spend for their media and their agencies, they look for more efficient places to spend their money and radio is at the top of the list of media in that respect.
And while bookings tailed off a little towards the end of the third quarter (ended May 31st), Q4 and the first quarter of fiscal 2006 is already looking strong, said Cassaday and Hayes. While radio bookings are done far later than TV, “we’re pacing more than 10% ahead for Q1 of fiscal ’06 with telecommunications looking particularly strong,” said Cassaday.
(With so many newcomers to the local phone scene like Shaw Communications, Rogers Communications, Cogeco Cable, Videotron ltee, Vonage, Primus and others all battling Bell and Telus and the other incumbents for market share, the ad spend will be high.)
So how long with this surge in radio revenue and profits go on? Not sure, said Cassaday. “We know that radio is a cyclical business and it won’t last forever, but it’s not just about hockey and not about one category or one advertiser. It’s pretty darn deep.”
